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Wednesday, May 6, 2009

Variable Pricing Affecting Sales

Preliminary reports from the major record labels indicate that the variable pricing on digital downloads they've desired for so long may be backfiring. It's early yet (only a month since it's been instituted), but so far pricing any track at $1.29 has affected sales in the wrong direction.

It's true that you can make more money with fewer sales with an increased price, but that's not what's happening as initial indications are that anything priced at $1.29 is actually losing money as compared to when it was priced at $.99.

What's even worse is that there are indications that the price increase is actually forcing consumers to look for free options instead of buying anything at all.

Everyone in the industry-know cautioned that variable pricing would set a bad precedent and make a business already falling off a cliff even worse, yet the majors wouldn't take no for an answer. As a result, an industry that's already dying from a thousand small cuts may finally take one in the heart.

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