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Music Download Store Experimenting With Demand-Based Pricing







Music Download Store Experimenting With
Demand-Based Pricing

Music Download Store Experimenting With
Demand-Based Pricing
01/08/2004 08:41 PM

One of the very good complaints about online music stores is that they offer all songs at the exact same price - which doesn't make much sense in the market place. So, one company is trying to test that out by offer ing dynamic pricing for its downloadable songs. The songs all start at the low low price of $0.10 per song, and then fluctuate based on demand. The company is still paying the $0.67 per song price to the music labels, so they're losing money on plenty of songs - but are saying that's the cost of the experiment. After they've spent the amount they've set aside, they'll go back to the old way of pricing. There are a few problems with this. First, explicit dynamic pricing tends to get a negative reaction from consumers - who feel they get ripped off when someone else bought the same product from the same store at a lower price. More importantly, though, true market pricing isn't just a function of demand - but of supply and demand. In this case, there's an infinite supply, so we're not really talking about market pricing at all. Furthermore, this service competes against plenty of other services that charge around a dollar for songs, so there's a clear upper limit on what they can charge for any song, no matter how popular. An interesting experiment, certainly, but not necessarily indicative of market pricing.




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Music Download Store Experimenting With Demand-Based Pricing

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