Christopher Sprigman of Public Knowledge is asking an interesting question of his readers:"Here's a puzzle: Most music downloads are priced the same - around $0.99. That doesn't make much sense. Different songs are ... different, not least in terms of popularity. So if consumer demand for Song A is much greater than for Song B, why are both priced at $0.99? Why are the hits priced the same as the dross?"
I've said this before. A buck a tune works on a very simple level for most music buyers. It's easy to equate one thing with another; One buck? one tune. When you bring a sophistocated "black box" price structure to a service like iTunes, you increase the amount of decision making required for the user to make a purchase.
99 cent downloads make the purchase a clear choice, which simplifies the buying decision. When you introduce a more sophistocated pricing structure to the mix, the music fan is forced to have a more complex internal dialouge.
Do I like this song? What price is it? Is it worth the premium? Maybe I should just wait until it's 99 cents like the other songs I bought. If I buy this higher priced song, does that affect the number of songs I can buy in total?
The true fact of the matter is, supply and demand law doesn't apply to digital downloads. I _know_ that song will still be there if I come back later. Applying a tiered pricing structure to digital downloads applies a false market force to the equation; consumers have grown smarter about the methods used to fleece them.
As I said in a recent rant about cut rate music downloads, "[Music business] credibility is weak at the moment which causes any attempt to raise prices to be seen as an attempt to shake down customers. Let's fix your image before we start thinking about price increases."
1. I'm not sure if I completely agree. But it is interesting to see how notable Long-Tail markets (like Apple and Netflix) have had a lot of success with fixed pricing, where "premium" or "hit" content doesn't carry a premium fee.
Posted at 4:47PM on Sep 1st 2006 by Tony Leach