Crazy Ideas: Lower The Price Of Music And Sell More!
from the give-this-guy-a-Nobel-prize dept
Not quite sure why this deserves the level of awed reverence it seems to get in the article, but the Globe and Mail is going on and on about some “academic” (and well-known music producer) pointing out that music download stores would sell a lot more if the music was cheaper — and puts the price of $0.05 as a target. Apparently, the reporter thinks that price elasticity is a brand new concept. Nowhere, though, does anyone do the actual math. All they say is that by reducing the cost of the music, they’ll sell more. Apparently, the reporter never stops to ask how much more and whether or not that makes up for the difference in price. Also, there’s already a pretty good example of this sort of pricing scheme, via Allofmp3.com, but apparently no one thought to look at how they’re doing. What the reporter also didn’t stop to point out is the fact that the music industry is still demanding approximately $0.65 for every song and given how they’ve been reacting lately, they’ll only be looking to increase that. The article also implies that Apple is thinking about this plan by “listening” to the guy. It doesn’t take much to listen — but there’s no way Apple is about to drop the price of their songs by 95%. A reduction in price does make plenty of sense, (actually, they should reduce the price to zero, recognize that the music is a promotional good, and get on with their lives… but that’s not happening any time soon) but it’s not quite as revolutionary an economic concept as the Globe and Mail would have you believe. In fact, for Apple, who still views iTunes as a loss leader for selling more iPods, it makes even more sense. However, someone discovering price elasticity isn’t exactly a big deal.