Blogcritics: Comments on Sandy Pearlman's 5 cent downloadable songs solution

Comment by Victor Plenty

Mon, 27 Jun 2005 20:36:37 EDT

Doubling from 5 to 10 cents won't double revenue. Not on a luxury item like downloaded music, where every penny of price increase will decrease your customer base by a significant number. The ideal for the music industry is to charge $2-$3 per song to everybody who will pay that much (buying 10 song new release CDs costing 20-30 dollars), while also charging $1 per song to everybody who will pay that much for the convenience of iTunes, and selling still more bits at $0.69/song (or whatever) to people who end up at Yahoo or Napster or Rhapsody or the other vendors less sexy than iTunes. Every economist knows revenue is maximized if you can make price levels curve to follow the demand curve. Trouble is, in most businesses that's impossible to do perfectly. But maybe the Internet will make it possible. I'm sure the record industry wouldn't mind collecting a nickel a song from everybody on the file sharing networks, if they can figure out a way to do it without losing their revenue from CDs and iTunes and elsewhere. But most of them will never publicly admit that, because revealing such ideas defeats the whole purpose of milking customers for as much as they're willing to pay.

Comment by Tre

Mon, 27 Jun 2005 19:56:18 EDT

Guys, I have a fever, and the only cure is MORE COWBELLS!!

Comment by sean

Fri, 11 Mar 2005 12:42:41 EST

I give credit to Pearlman for taking a proactive approach here. At least his business plan does not include suing his potential customers to teach them a lesson as its centerpiece

Comment by Eric Olsen

Fri, 11 Mar 2005 10:17:00 EST

I have said all along that somewhere around 5-10 cents ($1-2 per album) per song is the price point that would begin to feel like "free" and therefore remove the incentive for file sharing, with its numerous downsides (digital and spiritual). Downloaded songs are not the same as recorded music on a physical medium and should not be priced the same or anywhere near it. The point is to go for volume, to make it as painless as possible, and everyone benefits. Very important story - thanks T-man!

Comment by Triniman

Fri, 11 Mar 2005 09:47:11 EST

Yes, you're correct. Martin Birch produced 1981's Fire of Unknown Origin which contained Burnin' For You.

Comment by JR

Fri, 11 Mar 2005 09:37:32 EST

I thought "Burnin' For You" was produced by Martin Birch.

Comment by Aaman

Fri, 11 Mar 2005 08:40:25 EST

Interesting approach - any kind of creative solution has to be considered equitably if it means a way out of the current mess of IP torts. This model can be applied somewhat more easily by using a radio license sort of blanket fee - charged as part of the ISP fees, perhaps, with an opt-out. Actually, that is what the Rhapsody model is really, at a higher price level since there is little competition. So nothing new here, really. At the same time, Pearlman's idea of the major computer companies buying up the labels is foolhardy and not a solution to this problem - there is no reason to believe that the change of ownership will make any difference to the corporate policy. IT companies are strong protectors of IP (and TCP too:) ), and their own business model depends on it. What they are good at, though, is using innovative and easy licensing models to make money and still enable usage of their products, unlike the music industry - licensing models like shareware, freeware, and even adware can be borrowed by other industries to great benefit.