Will Lower Prices Help Sell More Albums?

from the one-would-hope-so dept

Tue, Jan 19th 2010 4:27pm — Mike Masnick

Before the recording industry effectively shut them down, the Russian website Allofmp3.com was doing a brisk business in showing that people were often more than happy to pay for album downloads if they were a hell of a lot cheaper than what iTunes and others were charging. Albums often were closer to the $2 or $3 range, which seemed a lot more compelling to many users. Of course, there were questions as to the legality of the service. However, it seems that some are finally realizing that it might help to make digital albums much, much, much cheaper. We've certainly seen this on limited attempts from individual bands, but apparently a large distributor of metal music has decided to lower the price on almost all of its digital download albums to $5.25. Who knows if that's the right price (I'd guess it's still too high), but it's good to see more experimentation on pricing. Hopefully, we'll begin to get more concrete data on how such pricing experiments work. We've already seen in the video game industry that price discounts can more than pay for themselves in increased sales. It's hard to believe the same wouldn't apply to music as well.

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Filed Under: album prices

34 Comments

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Rose M. Welch (profile), 19 Jan 2010 @ 4:04pm

Yes!!
That's why Amazon has whole sections of music under certain prices.

It's also why I purchased almost the entire Beatles catalog for about $0.25 per song. (I got in on the Bluebeat thing before it was shut down.)
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:), 19 Jan 2010 @ 5:11pm

Still High.
It should cost penny's and the reason is that people would use their disposable income more and complain less.

10% of 6 billion people is not unrealistic when the price is in that price range ($0.05) and for only one sale or use it would generate 30 billion dollars and that is more than the entire figure for the industry in a year, but probably could be a lot more higher as that price range incentives irresponsible expending and it is hard for individuals to track what they expend unless you want to keep track of every purchase you do what only a few bother to do.

$5 dollars is still high for general consumption and will not block the "paying again" factor but for a "premium" type of thing it could be a low price.

The right price for the internet is zero point something LoL
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drewmo (profile), 19 Jan 2010 @ 6:02pm

The new Vampire Weekend album is sold on amazon for $10, OR as an mp3 download for just $4 (Actually, it seems to be $8 now, but I bought it for $4 just a few days ago... wonder why it changed...)

The new Spoon album, "Transference" is the same story. $4 mp3 downloaded album.
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:), 19 Jan 2010 @ 6:09pm

Other factors.
Standard licenses don't allow anybody to do anything useful so some people will not "buy" anything from them or even use it even if it is free. No uses no sales.

But I guess dropping prices always help a little, although the PR they have now is bad and if they don't deal with that perception even free can't increase sales from people who won't buy because they are angry.

It is not just about money it may seem logical looking at numbers and missing the context for those numbers.

Even low prices can't help if people are pissed at you.
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keith (profile), 19 Jan 2010 @ 6:29pm

RTB!
Did you ever go to the site? Allofmp3.com wasn't popular only because it was cheaper - it gave customers options. Not only was it easy to use, it provided DRM free downloads and price was set by the download bandwidth. If you wanted a 128kbp Mp3 a typical album would cost 2-3bucks. But you could also choose a bunch of different formats like wav, flac, etc...

It gave people a RTB and delivered what customers wanted, at a price they were willing to pay. I browsed the site quite a bit but never purchased because it was a Russian based site and just didn't feel comfortable -- but had it been a US site I would have simply for the convenience factor.
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Andrew F (profile), 19 Jan 2010 @ 6:56pm

Re: RTB!
Amen. What you're basically paying for when you buy music online is convenience. One of the biggest reasons I don't download music off BitTorrent is that it's terribly inconvenient. I have to look for a file on a site with obnoxious advertising. Then I have to download a tracker that's different from the file I actually want to download. I need to give up upstream bandwidth. I have to sit and watch a download stall just because no one has that last piece of the file. I might accidentally be downloading a virus or simply getting poor quality music.

And yeah, I might get sued too.

If I can avoid all that hassle, I'd gladly pay something for it, but it's contingent on that convenience. Time is scarce. The more hoops I have to hop through, the less I'm willing to pay.
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davebarnes (profile), 19 Jan 2010 @ 6:56pm

Yes
We do all our CD buying at http://www.secondspin.com

Buy used. With a guarantee. Cheaper.
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Hephaestus (profile), 19 Jan 2010 @ 7:09pm

Amie Street comes to mind ....
Okay since free is king here I am going to hype Aime street where they have a 75 songs free offer and add some value, another thing that is hyped here .... :)

What the record labels need to do is what Allofmp3.com did and combine that with an AmieStreet type system. Charge at cost for the bandwidth. Let the market determine the price. Set minimum and maximum cost per song and album. The more downloads the higher the price goes, if the downloads slow reduce the price. Do a 70-30 (artist-label) split on the profits with the artists so they agree to the contractual changes that would be needed to allow this. And dont use creative accounting to screw with the artists.

Simple solution to saving the record labels ...
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Nater, 19 Jan 2010 @ 7:49pm

mp3sparks.com
Allofmp3.com is now mp3sparks.com. It is still up and running but you must have had an account from before to access the site. I still use the site to stream entire albums FOR FREE and have downloaded a few obscure albums which were difficult to find anywhere else. As a student this site has been an invaluable resource as I have listened to countless artists which I would have otherwise never heard.
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Anonymous Coward, 19 Jan 2010 @ 7:56pm

Re: mp3sparks.com
and that Vampire weekend CD mentioned above is on sale for $1.59 for 192kbps
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Anonymous Coward, 19 Jan 2010 @ 8:02pm

My dilemma is that I want the music in lossless format so I can encode it to what ever format I want/need in the future. I also do not want to pay for an entire CD when I like 1 couple of songs. I would gladly pay $1 (possibly a little more) for a song in lossless format.
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kyle clements (profile), 19 Jan 2010 @ 9:11pm

I have little experience with digital sales, so I dont know how relevant this might be, but the bands I sometimes work with often sell physical albums at their shows.
The going rate is usually either $5, $10, or $15. The price changes depending on the band, the album, the venue, etc.

Despite what I would expect, $10 seems to be the sweet spot. I imagine people refuse to spend $15 because they can buy a CD from a 'real band' for that much.
But why turn down the cheaper option? people are actually less willing to buy a $5 album than a $10 album.
Does pricing something so low imply that it does not have value?

The same might hold true for digital files. Low pricing might imply that it has little value.
Paying anything for a 128kbps mp3 file seems like a rip-off to me, but I would (and have) gladly paid $5 for albums offered in the .flac format, even when a legit free option existed.
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rockman123 (profile), 19 Jan 2010 @ 9:35pm

see what the pirates did
i don't steal rock and roll because of the natural stupidity that is that music, you know middle class white kids with nothing else to do, total waste, but i have charlie parker cd's i bought for 25.00 long time ago. i was in wal mart and they were pimping some crap for 6.00. keep stealing people- don't give the scumbag lawyers anything, tell the investment bankers to run something else in the ground no money here.keep stealing, yea a few kids will have to sell hamburgers for awhile but eventually the riaa will be broken and music might rise out of the ashes. keep stealing brothers keep stealing
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latex mattress, 19 Jan 2010 @ 9:35pm

I remember when I was in India in the late 1980's they had an analogous situation .. the cassette industry felt they were getting hurt by the large numbers of bootleg cassettes being sold. They responded by slashing prices thru the whole industry, and it worked.

If downloads can be consistently lowered to the $5-6 range, I think it would sell more here also. But it needs to be done on a large scale.
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Anonymous Coward, 19 Jan 2010 @ 9:36pm

Will Lower Prices Help Sell More Albums?

Yes.
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Anonymous Coward, 19 Jan 2010 @ 10:17pm

Re: RTB!
I used it. I never downloaded in the really low MP3 formats because the compression was just too much. I usually downloaded the (gasp!) more expensive FLAC files. Why? They were at a price I couldn't ignore, and they still sounded really good.

Price was based on the data usage. MP3s in low bit rates cost the very least. The 'lossless' formats were the most expensive, and well worth it in my opinion.
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John Doe, 20 Jan 2010 @ 4:56am

I would buy for $0.25 per song...
I would gladly pay $0.25 per song. Most of what I would buy would be old music from 70's, 80's, 90's. I would buy modern music too, but I would go back and buy all the favorites from my childhood on up. Since that music has already paid for itself many times over, there is no sense charging $15 per album.

As it is, I don't buy or download music period. Too many other things to spend my money on. But for a good price, I definitely would buy.
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The Infamous Joe (profile), 20 Jan 2010 @ 5:18am

VPN
Judging solely on the fact that VPN services (and others like them) are on the rise due to the War on Unauthorized File Sharing, I'd say that what the customer wants is an all-you-can-eat monthly subscription that allows you to download in a DRM free file format of the user's choice.

After all, if you're willing to pay $21/3mo to disguise your unauthorized file sharing, then you're willing to pay $20/3mo to get it straight from the source. (Possibly even more than the cost of a VPN service, depending on how much of a hassle you feel going to BT sites is)

So, my to answer the title question: No, I think that buying music a la carte is a ship that has sailed. Fewer and fewer people are okay with *buying* digital music files at any price point-- but they will gladly pay for the *service* of getting those digital music files to their computer. I know I would, if it was competitively priced against the competition. (VPN services + Unauthorized File Sharing)
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Tim, 20 Jan 2010 @ 5:39am

Re:
Amazon offers albums as their "Deal of the Day" for anywhere from $2 to $4; generally those prices remain in place for a couple of days before they raise them back up (hence why Vampire Weekend is $8 now instead of $4; Spoon will go up eventually too if it hasn't already).

Still, Amazon is almost always cheaper than iTunes; glad to see it increased it's market share last year. And it's nice to see someplace actually charging less for digital items than the physical ones. But I agree - it's still too much. I would be willing to buy lots of albums at the $2-$4 price point, but I can't see spending $8-$10 on something that I could probably download for free if I looked hard enough (even if it is illegal).
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MCR, 20 Jan 2010 @ 5:48am

Basic Economics
As prices go down, sales go up (at least on a desired product). As prices go up, sales go down and people seek alternative products. Since one alternative is a free download, people migrate to that option if they feel the price is too high.

I think it's incorrect however to price all Albums at the same price. Each album has a specific price at which profit is maximized (profit through album sales). Sometimes that rate might be as low as $2, or as high $15. While reduced pricing models are great for sales, as long as we have fixed album prices (not market driven), we'll never really no where that optimum price is.
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chris (profile), 20 Jan 2010 @ 6:18am

forget selling individual tracks, sell me a piracy pass
it's too hard to track effectively, it would require too many people to change agreements that they have made, and it's just plain obsolete.

the system is already in place for people to get whatever they want, immediately, for free, it's called bit torrent.

so rather than fundamentally change everything to sell individual tracks at lower prices, why not just add one thing to the mix: a piracy pass.

keep using companies like media sentry to spy on downloaders, keep screwing artists with your creative accounting, keep everything the way it is. just sell me a pass for a reasonable price, say $10-$20 a month, roughly the price of a netflix subscription, an unlimited usenet account, or an anonymous VPN service. i can keep my pass on file with my ISP so when the letters come, the ISP can say "at the time of your complaint, this customer had piracy pass #xxxxxxxxxxxxxxxx which was valid at the time of the alleged infringement". this is pretty much how car insurance works.

it's a voluntary tax, so only the people who want to pay will pay. the piracy infrastructure is in place already, so there's no need build anything new. it doesn't change the way many things work so it's easy to adopt. the various content publishers get money and business continues like usual. everybody wins.
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Chill, 20 Jan 2010 @ 6:45am

Re: Amie Street comes to mind ....
assumes that the record labels need saving

Oh, Hephaestus. what a joker.
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Stephen, 20 Jan 2010 @ 6:47am

amazon
there's is no better place to buy digital music than amazon. i check in with their deal of the day via twitter first thing every morning. go to: twitter/amazonmp3.
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Ben (profile), 20 Jan 2010 @ 7:18am

First, they need to get out to more countries with better licensing. Amazon for instance isn't even in Canada, we are stuck with iTunes and eMusic :(. Lower prices will definitely help but more markets are even more important.
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Doug B (profile), 20 Jan 2010 @ 7:22am

AllofMP3
I used the hell out of allofmp3. It was priced so low that I could re-buy albums I already owned on CD at prices that were affordable. At $2 per album I could easily have my entire CD collection in MP3 format for several hundred dollars, saving me tons of time and effort ripping all those CDs.

There's no way I could have paid $10 per album to do the same at itunes. At about the $4 point, ripping the cd myself becomes worth it to me.
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SeanG (profile), 20 Jan 2010 @ 8:08am

Re: Yes
Exactly what I was thinking. At least half my cd collection is used.
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Anonymous Coward, 20 Jan 2010 @ 9:52am

I loved allofmp3. Where did I learn about it? Right here on TechDirt. I think I spent at least $200, and with the insanely cheap allofmp3 prices, that meant I d/l a hell of a lot of music.

Amazon's Daily Download deals as well as their $5 MP3 albums, are enticing me to buy music. I spend about $20 a week, which isn't going to pay for Jeff Bezos' daily coffee bill, but if there are millions of us spending $10-20 a week buying MP3s, that's a decent profit margin for any e-retailer selling downloadable music.
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Larry LeBlanc, 20 Jan 2010 @ 10:33am

Lowering Music Prices
How moronic an idea lowering prices on music.

Why music isn't considered so important today is that the big major labels bowed to Wal Mart, Best Buy, Costco and other big box stores years ago and lowered pricing at these outlets.

This devalued the music.

Couple this with a lot of bad music out there; lack of radio and TV video support or narrowed formatting; and the rise of the intenet...music got pummeled.

I do think, however, that companies should introduce tier pricing. Older product online--that was paid for years ago-- should be cheaper than new music, for example.

But there are a lot of reasons today why the consumer will pay $50-$100 for a game but bulk at $10 for a CD.

Lowering prices won't change anything but devalue music even more.
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Anonymous Coward, 20 Jan 2010 @ 2:43pm

Five bucks for an album is about right I think. The fact that people are paying pretty much retail for whole albums at iTunes is fucking laughable considering that NOTHING in that process justifies the cost. No shipping, no packaging, no physical media, no overhead of any kind. If that same cost covered all of those expenses and more with CD's, then where exactly are the savings in digital media? The industry is cutting it's own throat.
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Anonymous Coward, 21 Jan 2010 @ 4:19am

question: why do blogs link to other blogs or news rather than the site itself? not just techdirt, engadget and gizmodo are more so guilty of this.

you talk about metalhit.com, yet your link goes to somewhere else. would it not have been better to just link direct to the source?

**

err, suppose something in this comment should be about the story. I wrote a blog post a few years back about itunes that talked about this.

if you dropped cd prices from $10 to $5 you would not double your sales. it would be more than that. $5 is a cup of starbucks coffee. $5 is less than lunch at a fast food place. $5 is impluse buy. i think the labels would find more and more sales.

the evidence of this can be seen from the initial $10 price for itunes. at the time, most CD's were still in the $15 range.
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Anonymous Coward, 21 Jan 2010 @ 4:54am

I don't see how this couldn't be a success. Desirable $5 commodities definitely qualify as an impulse purchase for most Americans (even with this orchestrated financial crisis). Without fail there are always multiple someones excavating the depths of Wal-Mart's $5 movie bin looking for a movie that suits their tastes; and they usually find one or two. Imagine how fast the bin would empty if these people could scan a sorted list of the bin's contents or even search for a particular title/director/actor.
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Anonymous Coward, 21 Jan 2010 @ 5:00am

Re: forget selling individual tracks, sell me a piracy pass
Your idea is impressive and needs more exposure.
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Lachlan Hunt (profile), 21 Jan 2010 @ 5:38am

I think $5.25 is a rather uncomfortable price point. I'd say $4.99 would have been better, since it has all the psychological benefits that come with prices ending with .99. I've heard of studies showing that such prices are more attractive to customers, and it's why such pricing tactics are so common in retail.
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Music (profile), 30 Aug 2012 @ 2:42pm

It's horrible what listeners and customers are doing the to music industry, $2.00? $5.00? seriously. No one even cares or understands what the artist has to do, all the time and money to get the recording ready. Writing, recording, (all the time spent perfecting the song), adding, taking out, editing, mixing, mastering. The artist is already in debt before the CD or Digital is ready sell. And you want them to even give it away for free, let alone the ridiculous low price you seem to demand.

The artist finds something they are good at and have passion for and want to make a living doing it. Would you flip burgers for free or work anywhere for free or close to nothing. I guess the artist should live in a tent, flip burgers and make music just to give to you.

It's sad what happened to youth where they do not even respect the artist enough to pay them what they are worth, they know better what the artist should sell to them for without any knowledge of the process, it's just not the download company, but the artist that is getting paid. I guess it's the me world.
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