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Buzz Out Loud Lounge: A viable business model?
A viable business model?
by radiationman - 2/14/07 8:57 AMSo I got to thinking about allofmp3.com today thanks to the Beatles story yesterday...
It would be interesting to see just how profitable their business model truely is, and more importantly what kind of volume they actually do.
It's not that I agree with all of mp3.com. I think they're pirates that are using the thinnest of technicalities to skirt the law. But can the model that allofmp3.com uses (less the piracy) be profitable based on volume? Would you have more volume of songs sold for less money without DRM than you do when charging more for DRM'd music (ala iTunes or Rhapsody).
I understand that the big sticking point here is the record companies. To make this work the record companies would have to be willing to get less money per song than they do now, but would an increase in volume make up for the lost revenue that comes with lowering the royalty fees?
Is there a sweet spot for the pricing of non-DRM music? A price that's high enough to be profitable for the seller, still low enough to boost sales, and low enough that it wouldn't be worth the effort (or risk) to pirate either...
No simple answer.
by Renegade Knight - 2/14/07 11:24 AM In reply to: A viable business model? by radiationmanTo answer your question there is no simple answer. Half of marketing is figuring out the price you should charge. If you could it would be nice to run the experiment and see what works best. Sell by volume, sell less at a higher price. Try a medium price, then do what works. The catch 22 is that you have to figure all that out before you sell your product.
If 3 businesses who are more or less the same each have a different pricing plan then you can figure out what the right answer was.
There is a best price that leads to the most profit for each and every product. But finding that price isn't so easy.
Lemonade stand...
by gogomama - 2/14/07 1:23 PM In reply to: No simple answer. by Renegade KnightI think whenever I get some free time (read: after I graduate) I'm going to have to make a Lemonade Stand style game for trying to sell MP3s. It'll just be for a joke, but I think it could be funny. For example if you leave DRM on the songs you're attacked by pirates. Just a thought. 
Yes.
by thriftyT - 2/15/07 6:45 PM In reply to: A viable business model? by radiationmanAs a matter of fact, a certain Mr. Jobs thinks that you can increase the volume of songs sold simply by removing DRM (and not necessarily lowering the price).
It's not just about the price
by fbbbb - 2/15/07 7:19 PM In reply to: A viable business model? by radiationmanIt's also about the buying experience. AllofMP3 is the best online music buying experience. Better in many ways than iTunes, especially for people who really love music. It would probably cost anyone else millions to replicate the same experience.
Working out a mutually agreeable plan between the recording labels and AOMP3 would be a win-win situation IMO.
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