Tuesday, February 9, 2010

Expensive Music Equals Slower Sales at iTunes

Last year when iTunes music prices went from $.99 to $1.29, music labels got what they wanted, a variable pricing system. This allowed labels to price their music from $.99 to $1.29. This morning it was reported by Warner Music Group that unit sales growth at iTunes has been decelerating since the change in price last April. This is not to say that they haven't been selling music, but the increase in sales growth has been declining from a 10% sales increase in September to a 5% increase in December.

According to Warner CEO, Edgar Bronfman Jr., the price increase has been a "net positive" however increasing prices 30 cents during a recession wasn't the best idea. (Well duh!)

It's now a question for the book market, with the digital book downloads on products such as the iPad and Kindle, what to do with their prices. If prices are high in the beginning, they will be adopted more easily than if they were raised later in the digital adoption period. As goes for any product, it's easier to launch a product at a high price and lower it than try to raise it once consumers have gotten accustomed to the lower price point.

~Rebecca Weyhrauch


No comments:

Post a Comment