Will Walmart's Entrance Signal Download Store Price Wars?

from the had-to-happen-sooner-or-later dept

I’ve been wondering how long the $0.99/song price for music could hold. Already, some say that the dollar a song price is too much, and basic competition would suggest that the prices will get driven down over time. The floor at this point is the $0.67 that the labels demand from each song sold. So far, the various download stores have mostly (though not completely) held the line at a dollar. Sooner or later, though, you had to know that someone would realize they could get more attention by going lower, and who else but the leader in “everyday low pricing” Walmart? They’re testing their new download store with songs at $0.88 per song. Hello, price wars! Of course, they know that they’ll be losing money on this offering, but they see it as a loss leader to get people to buy other stuff at Walmart.com. So, if the price war continues, at what point will someone realize that, since they’re just using the music as a loss leader anyway, they don’t mind paying the $0.67 themselves. For example, Apple already says they’re losing money on iTunes, but more than making it up on iPods. Wouldn’t they sell more iPods if the music were even cheaper? It’s an optimization question of “how low do you go?” until the cost of the music outweighs the benefit of selling more other stuff. However, if the music really is acting as incentive to buy other (high priced, high margin) goods, you’d think they’ll eventually be willing to go pretty damn low.

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Comments on “Will Walmart's Entrance Signal Download Store Price Wars?”

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Michael Leuchtenburg says:

Walmart price pressures

What I’d wonder, more than that, is whether Walmart will be able to force the labels to lower *their* prices. They’ve done it with other suppliers, many many times, but I’m not sure they’ll be able to in this case. They don’t, and won’t, control enough of the music market to be able to bring the same kind of pressure to bear as they can in other markets.

Still, I would like to see them try. Two forces I hate going to war is usually an amusing spectacle.

Anonymous Coward says:

No Subject Given

Think wally world (and mike) may be a bit overly optomistic here. I don’t think that going on line to buy music a Wally world is going to encourage me to shop in their other areas. Unlike foot shopping, when I go online, I generally go with a particular focus… and if they shove so many ads in front of my browsing at music that it becomes intolerable and don’t think many people are going to stay around.

Point of reference for wally worlds online experiences. Everyone said their online movie rental would kill Netflix. Yesterday Netflix raised their revenue and subscriber numbers for the quarter. So far, wally world… little to no impact.

Basic reason for this, I feel, is that the netflix experience (at least for me) has been flawless. Ergo, I’ve had no reason to look elsewhere. In the same light, my online music experience at apples itunes store has also been flawless. Do I really want to spend the time and effort looking for a less costly alternative (10 cents) unless it has the same experience ???? I think one thing most people will agree on, is that shopping at wal-mart (brick and mortar) is never equated to the word pleasant or easy or flawless. It does = cheap but seldom anything else.

Now if wally world has that ‘gee whiz’ feature that itunes doesn’t, it might be worth the time and effort of checking out.

a friendly greeter says:

Re: God Bless Sam Walton

How long until the general public wakes up and realizes that for every loss leader that Wal-fart touts, something else has to be sold at a higher price in order to balance this out ?

Oh wait, Wal-mart can just use slave labor in China and to hell with any responsibility. As long as the American consumer is happy, all is right with the world.

eeyore says:

count me out, Sam

Here’s why I pass on this:
“Once you play a song you downloaded from Walmart.com, it will only play on that computer, even if you are able to transfer the song file to a different computer. This is because the license file (required to play the song) remains on the original computer. You cannot transfer this license file to another computer.”

From Wal Mart’s download site FAQ.

IceBurrg says:

No Subject Given

More than anything else, I’m worried about the content of what Walmart sells. They have a history of censoring music and movies. That said, anything tthat resembles a price war can’t be bad for digital music! Does anyone else think it’s a crime for the RIAA to get 67 cents per song? Apple put all of the hard work, research, and capital in to get iTunes up and running. Now that it’s a huge success, the record companies sit back and collect 2/3 of the profits. All this without any risk to themselves.

Disgusted says:

Wal Mart Music

Yet another set of morons who are trying to launch online music.

They don’t get it. I buy – they sell – no strings attached.

I shouldn’t have to be connected to the internet each time I play a song – so they can track my activity. Screw them.

They will fail like everyone else because they don’t follow the basics of retail – keep it simple stupid. Keep it quick and easy or I’ll go somewhere else.

What maroons!

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