Bizarre Economics: Price Goes Down, Sales Go Up

I have said all along that online music sales has to be a low-price, high-volume operation in order to cut into free P2P, which clearly has disadvantages of spyware, ads, unreliable files and labeling, and less than 100% good karma. I think the price range for unrestricted MP3s should be somewhere between $.10 and $.25., which will almost FEEL like free, but will most certainly not be. Get it right or pay the price – here is some evidence:

Listen.com on Tuesday said it has seen a nearly 100 percent increase in CD burning among subscribers to its Rhapsody online music service since cutting its fee to 79 cents from 99 cents per track.

Rhapsody would not disclose how many tracks were actually burned in June, but said that on-demand streaming has increased 45 percent to more than 11 million songs, or more than 350,000 songs per day, in June.

Listen.com said the brisk activity for its service as well as Apple Computer Inc.’s (AAPL) new music service, which has sold more than 5 million songs, show that consumers are willing to pay for music online if services are compelling.

….Rhapsody is considered by critics to be among the easiest-to-use subscription services, but has never released subscriber numbers. Analysts have estimated its subscribers total less than 100,000. [Reuters]

Still too expensive, still too many restrictions, still not enough selection, but a move in the right direction.