Best pricing model for selling MP3s, ever?
Aug
8
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Wednesday, August 08, 2007
When it comes to downloading legal music from the internet two of the biggest names in town - iTunes and eMusic - have built up their business on back of two different pricing regimes. iTunes charge consumers by the download - 99 cents for each DRM-protected track (or EUR 1.29 for a track that is DRM free, but of EMI artists only). On the other hand eMusic have a subscription model where every month you can pay from EUR 12.99 (for 20 downloads, no DRM protection) up to Euro 20.99 (for 75 downloads).
iTunes and eMusic however can expect some potentially considerable competition when Amazon launches their MP3 store later this year but the most disruptive aspect of their launch could be its pricing model. While there has been no announcement yet from Amazon on how they will price their downloads, a strong hint emerged this week when it was revealed that Amazon has invested in a small US based start up company who have a very innovative new pricing model for MP3s.
Amie Street, the small online music retailer who secured the investment from Amazon, are already out there offering a unique pricing structure - every song sold by Amie Street is not just free of any DRM shackles but it is also - initially - totally free to download. But as more people start to download the song the price rises, up to a maximum of 98 US cents (i.e. 31 cents less than the price of a DRM-free track on iTunes).
Will this be the pricing structure of Amazon's future MP3 store? If so - and it is successful - could we see the eMusics and iTunes of the world adopt it? It all remains to be seen but the whole digital download industry - despite the ubiquity of iPods and other portable MP3 players - is really only now getting off the ground. And the major labels are playing catch-up.
Between Amazon's pending (DRM-free) arrival in the market place and Steve Jobs' plea to the music industry earlier this year that they remove copy protection from MP3s (which to date AFAIK has only been embraced, among the majors, by EMI), I think it is a matter of time before restrictions placed on legal downloads become a thing of the past. Sure, as Prince is showing the world, you can give away your music to your fans - without copy restrictions nor charge - and still make a financial killing (once off payment of £250,000 from the Daily Mail, and God knows how many millions from his 21 day stint in London's O2 arena).
I know it's all very utopian but the day may still come when we will have an even simpler version of the Amie Street pricing model: music available for free, forever.
5 comment(s) so far...
Re: Best pricing model for buying MP3s, ever?
Eoghan would you say that this pricing model would encourage people to listen to new (i.e. free) music and acts? That would be cool indeed. I'm not a downloader or MP3 owner, so I'm curious about all this...
By aidan on
Wednesday, August 08, 2007
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Re: Best pricing model for buying MP3s, ever?
Have to say Aidan, there is a certain stroke of pure genius about this model especially from the perspective of emerging bands. What I didn't go into in the entry above is that Amie Street also focus on allowing users of their service to recommend tracks they have downloaded (they have even set it up so that if you recommend a track and it goes on to become popular - i.e. the price of the download increases - you get some dosh for your recommendation, not much, up to a maximum of 98 cents per recommendation). Anyway, the focus on allowing users to recommend a track, because of its viral implications, may make this service more attractive to emerging bands for distributing their music than others. Although I don't think it is a given that an established act would embrace this sort of service. A decent new track from an established act could hit the market immediately at a higher price. Some acts might prefer to price it high straight away and so have no real need for this sort of model. On the other hand maybe they could just give away their new stuff for free, build up some excitement / publicity that way and then make their moolah with tours and merchandise (à la our purple friend...)
By eoghan on
Thursday, August 09, 2007
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Re: Best pricing model for selling MP3s, ever?
It does sound like a great, forward thinking idea. It's kind of like a musical stock market, if you're in a band you can log in every morning and see what you're valued at and for people like us who are more interested in the less-mainstream side of music it could be good news too. I'm not a downloader either but something like this could convince me. Unless there's a catch.
By Peejay on
Thursday, August 09, 2007
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Re: Best pricing model for selling MP3s, ever?
Seems like a great idea, but until the major labels come on board, probably not all that revolutionary. I can already get all the independent stuff I want at a fair price from Emusic (who often offer free tracks to members too).
I do not think a future of completely free downloads is the future, just fairly priced, DRM free, consumer friendly downloads. I think the success of Emusic proves that. It's one thing to talk about Prince giving away his music and still making a killing but he is an established artist whose career was already established in the pre-digital era. Where does this leave bands that don't tour or do merchandising. Live music is good, but the world would be a poorer place without bands that spend most of their time in the studio.
By Binokular on
Thursday, August 09, 2007
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Re: Best pricing model for selling MP3s, ever?
Binokular, Fair point about bands that don't tour or do merchandising. The faceitious answer would be to say they should start touring / printing t-shirts / commissioning key-rings. But the Amie Street model - by its very nature - may offer them both a source of revenue, and opportunity for exposure to new audiences. They will though have to adapt to the new landscape, that may mean any number of things. Maybe already-established, non-touring, studio-based acts will have to get their fan base to stump up a few bob before they head into the studio (as Marillion got their fans to do and even Nicky Kelly (ex-The Fat Lady Sings) did back in the early 90s, if I remember correctly). Or they could do a Moby and choose to license some of their mew-zak to telly ads. It's not like there are no options to such acts. Just fewer.
By eoghan on
Thursday, August 09, 2007
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