Sunday, May 9, 2010

Bob Baker: Giving Music Consumers These 3 Choices Leads to More Revenue

Bob Baker of TheBuzzFactor recently did a study regarding a new release from the Raveonettes. Scott Cohen, manager of the Raveonettes, wrote an op-ed piece that appears on the Billboard website. In this article, he shares interesting numbers from the Raveonette's newest release.

Here are some interesting figures:

When choosing between a full length digital album for $7.99 or a single track for 99 cents, 75% of the time fans chose the 99 cent single. Since most of a band's revenue is generated from album sales, this is not good news for the band.

Trying something different, the Raveonettes released an EP, available for purchase at $3.99, as well as offering the single tracks for 99 cents. Given the choice, more than half chose the EP over the single track. "By providing different pricing and format options, we were able to increase our sales from casual fans who want more than a track and less than an album," says Cohen. "Should we consider selling full-length albums on physical formats and dividing the album into three EPs for the digital release? The evidence suggests that this would generate more money."

Cohen believes that offering a full length physical CD (15 tracks for $15, maybe accompanied with a DVD or another form of upgraded packaging), three digital-only EPs (five tracks each for $3.99), and singles (99 cents per song). He believes that this will satisfy new fans, casual fans, and core fans.

This study is very interesting and may open up new marketing opportunities for bands approaching a new release. The results of the study only make sense; new fans are offered the opportunity to buy single tracks, casual fans will be able to enjoy an inexpensive EP, and the core fans will be able to have a unique, high end physical product. Following a similar strategy will allow bands to maximize profit while keeping all tiers of fans satisfied. It will be interesting to follow similar case studies as they arise in the future.

-Scott Schaffer

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