Tuesday, August 17, 2004

The only way to seriously drop beneath a buck a track is to negotiate new deals with the majors and, perhaps, offer much better prices for indies where the bureaucratic inefficiencies are much smaller. In theory you could give an indie twenty five cents a track (going right to their pocket), which would be a better deal than a label would offer. This would allow 50 to 60 cent tracks --- if that makes sense. The public may be perfectly happy with tracks for a buck. [tingilinde] Very few people would want to fill a 40GB iPod at $1/track. The marginal cost of music downloads is very low, so volume discounts, maybe through a loyalty program, make obvious sense. The online music stores would have to negotiate for lower unit costs with the labels, but after all bricks-and-mortar retailers like Walmart already push the labels hard for wholesale discounts and get them. The tipping point will come when and if the labels feel that they have to be on the online channel. At the moment, the online stores are still trying to build their business, so they have little leverage. 2:17:55 PM