Low Song Pricing Is Here To Stay

Filed in archive Business , Industry , Marketing , Society & Public Policy on June 12, 2007

Leading online music store eMusic with has driven song prices down as low as 25¢ if you max out their song bundles. eMusic offers over two million tracks, all in open MP3 format.

But many labels aren't too happy about it and some, like Victory Records, have left the store. eMusic CEO David Pakman though is sticking to the price. In his blog he wrote "The customer now decides which music is successful and how much they're willing to pay for it. And, the truth is, our customers tell us that 99 cents a song is not the right price for most music - particularly for music that they haven't heard of before."

"According to data we analyzed from the RIAA and ipsos, last year, more than 30 percent fewer people bought music than did in 2000. Many have offered theories to explain it - piracy, music quality, you name it - but informed people will tell you that a very big reason is that consumers, inundated with well-priced entertainment choices, think most music is too expensive."

"Music is an elastic good, and we have now seen that by raising prices, the industry in fact did not make up the revenue, and, in the end, only slowed sales."