Top 5 Amazon Music Sellers Are Under $10
File this one under it ain't no coincidence:
It has long been my argument that the recording industry mispriced CDs long after they first introduced them at much higher prices. While most of technology/entertainment products have come down in price dramatically, the Recording Industry has tried desperately to maintain their higher pricing, lower unit sales model -- despite the marketplace's rejection of it.
The industry did not respond to competition from DVDs, or Video Games or the Internet. The industry denies pricing is an issue, blaming piracy, downloading, CD burning, mixed DJ tapes, even boy bands -- anything but their broken old school pricing model.
So it makes me ask this question: Can anyone in the industry explain to me why the top 5 bestselling CDs on Amazon.com are all well under $10. Some are even $6.99!
And don't blame the Boomers; They tend not to be all that price sensitive on small purchases (See Starbucks $15.99 CDs as an example), and besides, Norah Jones and The Beatles are the only real Boomer fare in this short list
Consider these CDs:
2. Begin to Hope, Regina Spektor
3. Wincing the Night Away, The Shins
In the top 10, there is but one disc priced over $10 (11.99) -- every thing else is $10/per CD (Or 20 per double disc); There is 2 in the top 15, and as you work you way down the list, the higher the price, the weaker the sales (more or less)
Quite frankly, I doubt this is a coincidence. If anything, I suspect it reveals that CD purchasers are increasingly price sensitive, given all of the competing entertainment outlets and technologies
Monday, January 22, 2007 | 07:30 PM | Permalink
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» Classical Music: Economics meets the Long Tail from The Big Picture
We have in the past, looked at the Long Tail of music and digital media. I have been particularly interested in the impact of pricing on the Long Tail. (see this as a specific example: Are CD Prices Getting More Dynamic?). The Long Tail, by its very na... [Read More]
Tracked on Mar 20, 2007 5:38:44 AM
Comments
Of course. Which is why people will repeatedly join and unjoin clubs like BMG. They can get their 10 CDs for a buck plus ~$3 shipping and handling buy the required 1-4 CDs. Quit and start the process over.
Posted by: Sedge | Jan 22, 2007 9:05:47 PM
Excellent points. The digital advantage has become the choice of reasoning when making a decision to buy this content. Yes, Boomers will face inelasticity, but the younger consumers drive much of this channel, and sensitivity prevails.
Posted by: Ted Carissey | Jan 23, 2007 1:29:00 AM
Isn't there some degree of progressive discounting going on by Amazon? The more popular the item the bigger discount?
Posted by: talboito | Jan 23, 2007 2:05:26 AM
I am not sure -- its a bit of a chicken and egg situation.
Note that two of the names -- Norah Jones and The Shins -- are CDs that are scheduled to be released later in January, AFTER they broke into the top 5
Posted by: Barry Ritholtz | Jan 23, 2007 5:56:50 AM
Another kiddie social site? It was interesting, now its all about adolescent music crap. Drop this nonsense and report about business.
Posted by: john edwards | Jan 23, 2007 8:01:15 AM
As a recording engineer and 1-man independent record label, it's not surprising to me that digital sales are stalling. Even though it has been marketed as 'cd quality', it's not. People may not hear this if their ears aren't good, but unconciously I think a lot of people are not responding to this format and aren't buying.
As this was supposed to be the way to replace revenue from falling cd sales, cd prices will continue to drop, which is a good thing. However, the longer the music biz is messed up, the more people get turned off and out of the habit of listening to music. And the harder it will be to get people excited about music again. It's not a very pretty picture.
Posted by: Steven Walcott | Jan 23, 2007 10:42:22 AM
Budget pricing (eating the losses associated with selling CDs at a discount in the short term) is a strategy used by labels to "play the chart game", or get higher chart/sales figures. These lead to better placement in the press and other media, thereby leading back again to higher sales. Sales and chart figures are also used in negotiation for rates paid for live performances.
Also, generally speaking Amazon set their own prices, which can vary wildly by territory. They are an absolute nightmare to deal with for an artist, as they have no regard for the artists' own input into pricing.
Posted by: Maryann Melchior | Jan 23, 2007 11:13:23 AM
A glimpse into the dark heart of the record industry, courtesy of "Fake Steve":
http://fakesteve.blogspot.com/2006/11/really-amazing-thing-about-itunes.html
Posted by: David | Jan 23, 2007 2:04:42 PM
Screw Amazon. They constantly remove items from their site. They keep resetting purchases on Alex Jones Terrorstorm (to keep it off bestseller list). They banned the book "America Deceived" by E.A. Blayre III. America Deceived (book) They mess with Carter's book numbers.
Buy nothing from them.
Posted by: 5th of November | Jan 23, 2007 6:08:57 PM
Amazon is selling these as loss leaders. Check other music stores (J&R, Buy.com, CD Universe, etc.), you'll notice that the prices of these CDs are higher than on Amazon, and generally higher than $10.
Posted by: Rubens Morse | Jan 23, 2007 6:39:16 PM
Barry, I agree that the industry has resisted too long in bringing CD pricing in line. But what about the "Long Tail"? Quite possibly, it is the widening inventory available for music CDs and individual songs (from e.g., ITunes) that has reshaped the pricing of Amazon's top sellers.
Posted by: Ken | Jan 25, 2007 3:46:18 PM
I am looking for All time Greatest Hits and Louis arm,strong the Essential Louis Armstrong,
Posted by: Linda Tindall | Feb 2, 2007 3:43:52 PM
