How to Save the Recording Industry?: Charge Less

Abstract

People want to own music. Even if they only own the bits of data on a hard drive, consumer behavior indicates users still desire to have an ownership interest in their music. This means that as the CD goes the way of the pay phone, online retailers who offer perpetual rights to music will become increasingly important. As online retail becomes the way of the future, record labels, music publishers and music e-tailers must find the ideal price point for their product. Apple's iTunes, the most popular music e-tailer, has sold hundreds of millions of songs at ninety-nine cents per unit. However, digital music sales still only account for about 30% of music sales and, surprisingly, the growth rate of digital music sales has been tapering off of late. This ceiling on growth suggests that iTunes' famous ninety-nine cent price point may not be ideal. This Article defines the ideal price point as the price where profit is maximized while minimizing the economic obstacles that lead to music piracy. The lower the price of music, the less likely consumers will spend time trying to find free illegal downloads or get it from their friends, and the more likely they will be to buy music themselves. The music industry should stop focusing its energy on continued CD sales, and should develop a more viable, cheaper, online delivery system. The music industry needs to give music to consumers at a price - yes, close to free - that will increase demand and propensity to pay for it. [ABSTRACT FROM AUTHOR]