Over the course of the last few years, the online music market has had its fair share of battles, and has left music marketers wondering what the next step toward securing sales should be. According to the IFPI Digital Music Report 2010, there is a ton of growth potential in the market and “one way of realizing this potential is to generate value from the behavior of the vast number of people who currently do not pay for music they consume.” How can this be done? Some retailers in the industry have turned to bundling practices to help secure sales. They bundle music with services and devices that one could not necessarily secure via a file sharing website. In essence, by differentiating the services provided they music retailers are able to position themselves above other providers and they are able to legitimize the costs associated with purchasing their products. In addition to bundling, some music retailers offer their music at reduced prices and subsidize the costs with the money raised through advertising. This helps to lessen the financial effects on the consumers end, yet earns enough profit to pass along to the respective record labels/artists.
Other pricing methods that have been utilized out in the trade, center upon release dates similar to DVD pricing. Establishments, such as iTunes, charge more money for new releases (much like Target would charge more for a new DVD) than they do for songs that have been on the market for an extended period of time. In addition, some markets have shifted to a second degree price discrimination type model, where consumers get quantity discounts for buying multiple songs. It will be interesting to see what innovative methods emerge as music retailers continue to try to capture that large chunk of the market that continues to embrace piracy over legal means of attaining the music they love.
- Katie Tretter, Courtney Hayward, and Laura Heslop
Other pricing methods that have been utilized out in the trade, center upon release dates similar to DVD pricing. Establishments, such as iTunes, charge more money for new releases (much like Target would charge more for a new DVD) than they do for songs that have been on the market for an extended period of time. In addition, some markets have shifted to a second degree price discrimination type model, where consumers get quantity discounts for buying multiple songs. It will be interesting to see what innovative methods emerge as music retailers continue to try to capture that large chunk of the market that continues to embrace piracy over legal means of attaining the music they love.
- Katie Tretter, Courtney Hayward, and Laura Heslop
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