Slashdot Mirror
Amazon Invests In Dynamic Pricing Model For MP3s
NittanyTuring writes "Amazon recently closed a Series A financing deal with Amiestreet.com, a startup selling DRM-free MP3s with a demand-based pricing model. All music starts out free, and prices increase for popular tracks. Jeff Blackburn, Senior Vice President for Business Development, Amazon.com: 'The idea of having customers directly influence the price of songs is an interesting and novel approach to selling digital music.' What does this mean for Amazon's own intentions to sell music?"
A novel new business idea - the recording industry HATES that.
[Insert pithy quote here]
I for one welcome our DRM free overlords.
"Now you know, and knowing is half the battle!"
You know there will be much whining about people that bought $Song for $PriceA only to find that it fell to $PriceB.
And those that complain that $Friend bought $Song for $PriceA but now its up to $PriceC and its not fair that they have to pay more than $Friend for the exact same item
Won't higher prices mean more piracy? Or is that exactly what this system is avoiding?
By nobody buying a track (which *could* mean piracy) the track's price would come down and then people would buy it?
Wow, I think I answered my own question! This sounds pretty cool - less known music gets more exposure and more popular music gets set at a price people are willing to pay. Now, will they actually have a supply of music?
Buckle your ROFL belt, we're in for some LOLs.
I for one plan on using my first post skill by downloading as many songs for free legaly as possible. But seriously after they reach over 0.99$ who is going to ever buy that song from them again?
Have you ever found yourself telling someone, "yeah, I liked that song before everyone else thought it was cool." I can see this model encouraging people to explore and download and try new stuff so that later on, when the price goes up, they can brag about how they downloaded it first, for free, before it was selling for $5 a pop.
It also might open the door for more quality indies to actually make money. People might be turned off by high prices of what the RIAA cartel marketing is pushing, and go for the cheaper indie stuff. Then again, I am probably being too optimistic, as most teenagers will pay any price for "cool"
T-Pain will sell for tens of dollars while I can get Manu Katche for cheap!
Finally! All that non-conformance pays off!!
Cheers!
Atheist: Buddhist in a Prius
I thought all music was free by use of convoluted logic to justify such a thing.
For those who didn't, prices start a $0.00 and cap out at $0.98.
"Now you know, and knowing is half the battle!"
...but I'm willing to support the creation of music. Therefor in my opinion the model should work the opposite way. Popular songs should be cheaper to download.
It takes a man to suffer ignorance and smile
Be yourself no matter what they say
Early adopters are usually the ones who subsidize the latecomers. This is entirely backwards, as the latecomers are subsidizing the early adopters.
Will all the cool kids be saying, "I listened to , back when they were only 5cents a track"? It would be worse than people obsessed with their low Slashdot UID!
I only look human.
My mother is a halfling and my dad is an ogre, so that makes me an Ogreling
I think they named this: "Operation Screw The Little Guy".
The stuff I like will cost 0.01 while the popular spooge hits the cap. I love you, free market. :)
Much better than iTunes' $0.99 per song, $9.99 per album approach. Now, if only I had money.
;d
Those who prefer to listen to non-mainstream artists would get cheaper music, while those who prefer to listen to mainstream artists would pay more for it. It almost sounds like a tax on lack of musical taste to subsidize music geeks!
As more people download a song the price rises, capping at $0.98
I'd like to see a model like this. Ever since I installed a satellite radio receiver in my car, my musical horizons have broadened significantly. A lot of the artists I hear on some of the more obscure channels aren't indexed on iTunes or even available on illegal services like Limewire. This mostly applies to older music that is out of print, or never made it to CD.
It would be nice if there was a service like this that had just about anything ever recorded digitized and made available for download. Let the market sort out what's popular and what isn't, but give us access to EVERYTHING.
In this day and age, there is no reason why virtually every album ever recorded isn't available to buy a digital copy of.
The screw-you pricing of the airline industry and the crappy product of the corporate music industry.
Can't fail.
Now, for everyone who wonders why cookie cutter pop songs sell....
While it's somewhat neat this is only going to make the unimaginative pop artist richer and the indie artist poorer. When this model goes live and pop goes for $$$$ don't sit there and ask why big labels only seem to produce pop. At least with the old static model the indie artist could still make a buck off a few sales instead of having to have half the iPod owning population buy their song to finally make the rent.
Or in a much shorter form: If you're a small artist with a small fanbase you're best off to avoid Amazon. Regardless of talent.
Dedicated Cthulhu Cultist since 4523 BC.
Who wants to start this? I'm selling options for indie band A at 35 cents a song.
If moderation could change anything, it would be illegal.
As the volumes increase, the price increases and the piracy might increase.
What is interesting is that this model possibly finds the "perfect price". So much for economic theory.
In reality, a pirate will not buy some low-cost stuff and pirate high-cost stuff according to some built-in threshold. Once they have free piracy access to music they will use that for everything they can.
Engineering is the art of compromise.
Yahoo! Pipes are awesome. How awesome? http://pipes.yahoo.com/jesdynf/slashdot
I'd like to see a model like this. Ever since I installed a satellite radio receiver in my car, my musical horizons have broadened significantly.
No he listens to both kinds, country and western.
Won't higher prices mean more piracy?
Yes, but it doesn't matter, because *fans* always buy the CDs, go to concerts, get the merchandise, or pass the buzz around to their friends. That's what makes them fans.
The non-fans are irrelevant to the sales ledger, since they would never have bought anything anyway.
The RIAA wants to everyone to pay of course, even if they've downloaded the music but hate it.
But that just shows that the RIAA are fucking morons. They can't distinguish between the economics of virtual and physical goods. Alleged losses to non-fans equate to zero.
"The question of whether machines can think is no more interesting than [] whether submarines can swim" - Dijkstra
So your whole business model is really based on the concept that your product has no intrinsic value. The act of selling music is the only thing that carries value, not the talent and effort that went into producing it?
Dang it...I need to record some audio books of the bible or the dead sea scrolls...heck even Scientology....
I'll make a ton as the same 'customers' buy it again and again...
I better include a sony rootkit just to make sure....
"Only one thing, is impossible for god: to find any sense in any copyright law on the planet." Mark Twain
There just isn't. Because this can't possibly mean more money for them, if prices cap at 0.98. And if they didn't cap there, no one would buy the more expensive tracks from them anyway. But unless these "trail-blazing" people either forfeit all profit for themselves in order to transfer it to the recording companies, or come up with some other, novel way of incentivizing this process (theoretically, at least using a simple model, averaging 50 cents a download) which will halve their profits compared to what they get from iTunes, there is NO WAY the Big Four will go for this.
On the other hand, maybe the simple model isn't true, and maybe popular = most everything that the average buyer buys, in which case it won't look any different to the average buyer, so except for the DRM-free part (another deal-breaker for the Big Four), why should the average buyer care?
This is really good news. There are some good songs to be had on Amie Street for not much money. So far, I've bought 91 songs and have only spent $6.29. That's about 7 cents per song. With no DRM at all. Beat that, iTunes! ;-)
o .php
Oh, and if you happen to be interested in what I'm listening to, here's my playlist: http://www.jasons-toolbox.com/what-im-listening-t
My sci-fi novel, Ghost Thief, is now available from Amazon.com.
Wouldn't it make more sense to actually start at the highest threshold, and then move down the price based on how popular it is? Essentially creating a chain reaction of making songs that seem not so popular very popular to try?
And as incentive for those who bought the first ones, since they were the guys that discovered and pushed the price down in the first place (and made it more popular), give them credits for their next purchases?
Wouldn't that be a natural filter for crappy music and boost good music?
Fallacy-ridden arguments and ridiculous drawn out appeals to emotion is a more accurate representation. Remember: you should be able to do whatever you want with information, except if its the GPL! Then you have to follow the GPL!
In other news, the store announced that they would introduce music in order of popularity.
Please correct me if I got my facts wrong.
This is great for people who like to brag that they were listening to a band before they were popular. Now you can say, "Oh yeah, I was listening to them when their tracks were free. The fact that you paid $0.98 for them shows how much of a poser you are."
"It's not whether you win or lose, it's how drunk you get." -- H. J. Simpson
Cool, a Popularity Tax! So the masses would pay more for those craptastic pop songs and American Idol drek. Whereas, us Metalheads, Punks, and fans of other less popular genres will be getting sweet low prices. Sounds like a most excellent idea, Ted! [guitar-riff]
[Note: I was tempted to call this a "Stupidity Tax", but that just seemed overly cruel to the followers of Pop - they have their own problems.]
I think this is a great idea in the fact that it's a new idea. But, I'd prefer the business model be reversed.
If "Mr. Super-Cool" sells 1000 tracks a day at 0.98 then the artist makes some good money, but what about "Mr. Not-So-Cool"? His track sells for free, or very little, and the artist gets nothing, mostly because he's not popular. What if it was revered, AND you provided a library that was practically every song known to man? I'd gladly pay 98 cents for a song that I just can't find anywhere, legally or illegally. With a reversed model, maybe that poor Not-So-Cool guy could make a living even though he's not on one of the 'big' recording labels.
Or as an alternative, have it set up so the more tracks you buy, the cheaper they get? Buy x tracks a month and get y% off. Why not let the customers "buy in bulk" and save? Isn't that what our economy is all about? Buy a gallon of Mayo and save some $$$ instead of buying 10 smaller bottles?
This has interesting economics, clearly designed to help Amazon, but might also help smaller artists. I think I like it, but not sure.
... you'd think it'd be cheaper to d/l a popular song and make up pagehits with ads, but perhaps this makes smaller artists get more exposure.
There's no such thing as supply and demand in this model. There's only demand, and the supply is endless. So why does an infinite supply with a finite demand not equate to free? Bandwidth? They certainly can get some advertisement into the pages of popular sound downloads.
This seems almost backwards
TFA doesn't say whether these are in fact MP3 files, and the critical question is: will these songs play on an iPod? If not, this business is doomed before it starts.
-jcr
The only title of honor that a tyrant can grant is "Enemy of the State."
Okay, first, the old artists taht sell few songs at any given time, but still do constantly sell, no longer get any money. Plus, the industry doesn't make any more money than they do now, cos its capped.
Song costs $0.00 - I buy it
Song costs $0.20 - I buy it
Song costs $0.40 - I buy it
Song costs $0.60 - I buy it
Song costs $0.80 - I buy it
Song costs $1.00 - I bugger off to the itunes store
Well, I wouldn't, but many people would and you get my point. And this effectively means, this service could never reach the same average sales cost.
I'm already working on my script to download all new music the minute it hits the service -- before it becomes popular.
I can't wait for the madness that will hit once my script becomes popular in usage.
(Note, I'm not actually writing such a script, but someone will.)
SHEEBA.CA
Frankly, I give her more than the average price. You should too - she's NOT rich, and could use the money... but if you're poor, then pay what you can.
RS
Shoes for Industry. Shoes for the Dead.
The point of the model is pretty simple. It consists of pretending that the supply of copies of digital music files is actually limited, and then pricing the copies based on the variable demand for them.
The problem with the model is that the premise is false. The price of a copy of a digital music file shouldn't be driven by demand, because the demand is limitless. The price should be driven by the cost of producing, marketing and distributing it, divided by the estimated number of copies that will be sold over the period of time where the seller hopes to achieve the profit that the market is willing to yield them for bearing those costs.
It does follow from this that music that's expected to sell more copies, everything else being equal, should sell for less, because there will be more people to buy it over a shorter term. Also, music whose sales has already recouped its initial production costs should sell for less.
These two consequences do hold to some degree in the CD market. Go to a record store, and you'll see that the music of very highly popular artists often sells for a few dollars less than obscure artists, that reissues of old classic albums are often much cheaper than recent albums (look for stickers like "The Nice Price" on CDs), and that best-of compilations of popular older artists and styles are also cheap.
Are you adequate?
Are you adequate?
Thank you, fine sir, but a brief addendum:
In this sentence, "cock" could also be seen as having the properties of a possible verb - "cock" as in "to ready a firearm for projectile discharge" - the dullard appears to be setting up a second clause - an additional option if the hearer does not wish to "suck." However, as there is no object to "cock," again he fails.
I should thank him: he provided me with the opportunity to use "dullard." I also said "projectile discharge" without smiling until after the fact...
"Those who believe in telekinetics, raise my hand" - Kurt Vonnegut, Jr.
If not for the monopoly provided by copyright law
I'm not sure what monopoly you're referring to here, or how copyright law grants monopoly power to any particular actor in the music business. I'd agree with you if you'd said there is a music cartel (an oligopoly) that has managed to manipulate copyright duration to its benefit, but I don't see a monopoly.
Read the EFF's Fair Use FAQ
Now, if they can pen a deal with Pandora so you can find music you like that would be spectacular. You could stream all kinds of music at random (based on preference) for free, but with a nifty "buy it" button.
Yes, I am a smart ass; it's better than the alternative.
Let us apply our scarcity model for pricing for our post-scarcity commodity! And we can do this, because people expect it, for they are dumb.
Folks who are as smart as you, who have the same insight as you about the band's future popularity, and who therefore buy up the tracks early in the hopes of reselling them later for a profit. This will drive the early price up, of course.
There's this other novel object called "stock," bought and sold in much the same way via a facility in New York City, for which an obvious parallel to your moneymaking scheme is:
(1) Find new, unknown company which will later hit it big. Buy their cheap stock.
(2) Wait for company to become successful and its stock to become expensive.
(3) Sell stock.
(4) Profit!
Oddly enough, this scheme has never quite worked out as easily as newcomers think it ought to.
Prices rise with demand because usually supply is limited. Last time I checked, we can create bits from thin air, so we have an infinite amount of copies we can sell. So there's really no reason for prices to rise with demand. If anything, they should drop because you need a price ten times lower for a song ten times as popular to earn what you used to.
Send email from the afterlife! Write your e-will at Dead Man's Switch.
sooooo much free hip hop. and not much else for free. i guess that answered the supply and demand quesion...
This is a great model for new artists because the promotion pays for itself in the cost of the song. A few people gewt to try your song for free, and if word spreads, you make some money (assuming they don't switch to torrent when the price > $0)
The average sale cost would only matter if demand were static - especially since the cost of producing each additional unit is zero. All that matters is total sales - which may be higher because prices are lower. Other possibilities:
Copyright acceptable, DRM bad. I understand your point of view so far. But what about the obscene duration of copyright in Europe and the U.S. and spreading to their trading partners? Can you justify that?
Let's expand that headline title a bit shall we?
"Patent troll firm Invests in Dynamic Pricing Model for obsolete patent-encumbered audio format."
"Nine times out of ten, starting a fire is not the best way to solve the problem." - my wife
A) If prices start at $0 some group of individuals will start either automatically or (if that's not possible) manually downloading all $0 tracks one or more times a day. This creates artificial demand.
B) As it catches on that there's free music to be had more people will do A. Ultimately casual users will miss out altogether and only the fastest from group A will get tunes for free.
C) There is bound to be a subgroup of A that thinks "music wants to be free" or believes everyone should have access to it at the same cost (zero) as they got it for. The music will make its way onto the usual illegal file sharing networks.
D) Casual users are still left with the same option. Buy for $0.98 or download for free illegally.
These posts express my own personal views, not those of my employer
For a market controlled by both supply and demand, if you have the same supply of each song, it makes sense to charge more for songs that are more demanded, since you can only supply a limited amount of each song. But in the case of digital downloaded songs, supply is basically unlimited. You would want to set the price very low--as low as you can go while keeping the demand curve fairly elastic. (Obviously at some price point people will be too saturated and stop demanding more.) Moreover, if you factor in limited bandwidth, then the supply of each song is pooled. It makes no sense to charge a different amount for different songs because popular songs and unpopular songs consume the same supply (bandwidth).
I don't think i'll take my music purchases from brick&mortar to online @ $1 for a new hit song... I will however wait a few months and buy the whole album for $0.50. Will this happen? We shall see.
No words of wisedom here.
I love the Amie Street concept and I am likely to buy from their site but the information they provide is not complete. Maybe not all songs start at $0.
It makes sense though. Lately they have signed up a bunch of record labels that then introduces a whole lot of albums all at once. Have a look at http://amiestreet.com/elvispresley
All the Elvis songs start at $0.22. This is either because it is the introduction price or it is because only entire albums have been sold.
You're not remembering free market economics very well.
In the case of digital music, the supply curve is [very damn near almost perfectly] flat. The only marginal cost is the bandwidth, and the bandwidth costs for a few MB are almost $0.00. As such, you've got a demand curve with negative [non-infinite] slope, and a horizontal supply curve.
Supply and demand market based economics would suggest that the price would not change based on demand -- as the demand curve shifted, it would still intersect with the supply curve at the same price.
That doesn't mean that this system won't maximize profits. After all, the digital audio market is far more complex than the market for corn in the sense that a single song isn't a commodity, in the sense that there are copyright laws, and in the sense that people can choose to replicate the product at no direct financial cost to themselves or anyone else.
Interesting idea? You bet. Traditional supply and demand economic analysis? Not on this market please.
Support a few technologists in Washington.
Naturally, you get a limited number of RECs (based on the amount of money you put into your account) so you can't just go around RECing every free song, but you can partially fund your music habit by "investing" in the proper tracks. Unfortunately, once you REC a song you don't get the REC back in your account after you cash out.
I'm surprised more people haven't mentioning this. It is great for users because if you have a good ear for music you can legally download the expensive music for free using your REC credits. It is great for artists because if they make good, commercially viable music there is a much greater chance that they will not only be discovered by fans, but also be promoted by them.
and since the labels own the radios, mtv, vh1, and most record stores, this won't change much. it is by far the best idea for music that i have seen in a while.
What's to stop a farm of leech-bots to download all the tracks listed for free to drive up the price?
Especially if those leechbots were run by the copyright holders?
I really like this idea. If it works how I hope it works I will totally stop my pirating ways. The only thing that I can see that would damage this is if they don't get buy in from all the labels. That is, if I am going to buy my music there it better be a repository of pretty much any music I would ever want, otherwise why bother, there are better alternatives. Also with the whole uploading structure I am not sure how they plan on paying out to independents and the like (sort of an Admin nightmare I think).
However I think it would solve many of the pricing problems with CD's that piss me off. With traditional supply and demand pricing it makes sense, but I think it is time the industry realized that we are a bit beyond that now.
Things that piss me off:
1) That new album by pop sensation X just came out. They have one big catchy tune and a whole lot of garbage. I just want the one song please, as the rest of the CD sucks. Even at the rock bottom price of 12 or 14$ it is too much for one song.
2) The old album that I want to buy (or re-buy for whatever reason), is not as popular as it used to be, so of course they make less of them. As a result, oh that CD will cost you 30$. What??!! Sorry BS.
3) Some of the tunes I like are produced in some other country say the UK, and it is of a type that is say not typically that popular over here like electro... So we will make that CD either not available, or you can order it for like 50$.... What??
These things DO make traditional sense, however that isn't the reality we are living in now. The sooner they (and by they I mean the labels, the industry, and the associations) wake up and figure this out the better. Concerts and live shows and merchandising will still be traditional fare they can reap cash from, as they a physical objects, not just digital information or something abstract like a use license.
As a lover of classical music, I applaud this model. A search of their site shows most of the classical pieces to be under ten cents. However, as I expected, the selection is practically non-existent. Searching for "Tchaikovsky" yields ONE result. It's too bad too, because classical music fans have been so long-snubbed by the digital music download industry-- iTunes is particularly broken-- while their selection is decent, the iTMS contract states that songs over seven minutes cannot be purchased individually. No surprise that classical tracks are hardly ever under this limit. Hopefully Amazon's acquisition of this company, combined with Amazon's wide collection of classical CDs, will make for a much more robust classical selection in the future.
I think think the parent post gets a few things right that a post below misses after all.
We all agree that the supply of the song is digitially near-infinite. So, the "curve" is not supply and demand vs price. The curve is *pure demand vs price*.
Suppose a band called the Horsefly's Elbows produces a song. It starts off with a demand of ten, so it is *worth* near-zero. Then it suddenly rockets to the top of the charts, so the chic crowd HAS to have it. That's when the price goes up - it's the usual "price of being cool".
Now if you can get USERS to get rewards for selling "their" copies, you'd get a Musical Stock Market.
But maybe the Horsefly's Elbows NEVER take off. Then... you get to happily own your album for $0.57. And only you care.
This does devastating things to the Long Tail model.
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
If it's DRM free and it is initially $ free, then what is to stop someone from downloading the completely free MP3 and then sharing it with a million others for free?
Or was there an * associated to free? As in I want my free cell phone... What? I have to pay for my free phone? Huh?
If nothing else, this should become a day's lecture in an Econ class!
... your price drops to $2.25, because it took work to find the bargain values.
I will add the "McDonald's ComboMeal" price model: Your standard package of (food, music) could include 7 popular songs for $5. The hordes of undiscerning masses pay that price.
However, if you take the Live version of songs 1,3, and 6, and the Remix version on songs 2,4 and 7,
(McDonald's version: The Double Cheese is a dollar, the Quarter Pounder is $2.65ish)
My first Journal Entry ever, in 8 years! http://slashdot.org/journal/365947/aphelion-scifi-fantasy-horror-poetry-webzine
This isn't supply and demand this is risk minimization and viral marketing - those who are willing to listen to it before it has an established reputation get it for free; those initial individuals can also turn an additional profit by recommending it if it is good (there is a rewards system for doing recommendations, but there is a reputation system so that recommending crap hurts you) - as the items popularity grows and it is a less risky purchase the price increases. The price is capped at .99 a song, or 10$ an album so the highest price you pay is the cost of a standard song or album on itunes. It is actually a pretty slick setup and appears good for both consumers and bands that have big potential for becoming popular (niche bands with a dedicated fan base this might not benefit much though).
LetterRip
As a content creator who gives his creations away for free and does not engage in illegal file-sharing, I was not aware that I even HAD an ethical dilemma.
My mistake. You'll forgive my assumption about your own ethical practice? It really felt like I was forcing your hand over what should have been a simple yes or no answer.
Now, where did that get us?
It gets us to a common ground where we can discuss the complexities of digital copies without glossing over them.
But you CAN assume that I see a very clear distinction between private physical property and digital copies thereof.
I agree with you on this, but what exactly is that distinction? If you're saying that making and distributing a digital copy is different from physical theft, in that one would not be depriving another of their work, I partly agree. The creator or worker is not being deprived of the object of his work. But here is where it gets complicated, and where we start talking about the marketplace. If the creator's work has value to others, he can trade it on the market place, where we can determine exactly what is the value to others.
The next complication comes with mass replication. For (perhaps) thousands of years, we had a much different conception of what we now call Intellectual Property (if we had one at all). Before the printing press, copying of someone's writings was labor intensive, and before the invention of recording technology, copying of music was strictly performance based. If someone created original music, someone else could learn the music and then perform it. The creator might have a proprietary sense, but certainly in a way that is different from how we commonly think of intellectual property today. The concept probably was much closer to our "new" concepts embodied by Creative Commons and OSS licensing. Similarly, replicating a written document was labor intensive (and required a certain amount of technical knowledge, i.e., literacy).
However, in either case, the original creative product, whether concretely expressed in writing or more ephemerally expressed in performance, could be traded on the market. Or not. A creator could keep his work private, or even keep his work methods secret. There is a history of groups keeping secret writings and trade secrets (for whatever reason). In this sense we might talk about proprietary culture, although there are ancient precedents for that as well.* However, on balance, most culture was owned in common by the members of that culture.
OK, I'm getting bogged down in the details. Details are important, but lets fast forward to the time when mass replication becomes easy. It is at this point where things get really interesting. Here is where copyright is born, more or less. Before getting to judgments on copyrights or whether or not they are unnatural**, let's look at why they came about. Cost of production is sometimes overlooked at this stage, but I think it's important, because this is really the first time that we have something of a middle man working with the creator (granted, the creator can be his own publisher, but the principles are the same). This middle man is taking a financial risk, and at least hopes that the work will be well received and that he and the creator will realize a gain. However, without a mechanism like copyright, there is nothing stopping another from usurping the "right" of both the creator and the publisher to benefit from their work and investment. Faced with this, the publisher will not publish at his expense, and the burden falls on the creator. If the creator decides to publish at his own expense***, he could not only not see a financial gain for his work, but actually be ruined. So, absent some mechanism to protect his work and investment, it's fairly rational to not publish, or even to not embark on the writing in the first place. This is a negative for cultural development.
So, there's a pretty good reason for so
It's not offtopic, dumbass. It's orthogonal.