October 03, 2007
What Price a Download?
This is an interesting side note for monetizing digital content. Recently, RadioHead allowed fans to name their own price to receive a digital download of the new album "In Rainbows." But early indications suggest that Radiohead's loyal followers are paying too much for the band's seventh disc.
According to the WSJ, "the average fan appears to be willing to pay $10 for a digital copy. Now, that may not sound like a blow out. It's the going price for most records on Apple's iTunes. And that price, in turn, looks to be about right for a digitally downloaded album."
But dig a little deeper and an interesting economic model emerges. First, the CD retails for $16 of which $6.40 goes for manufacture, distribution, and selling in a store. When comparing it to iTunes, the digital album would cost about $10 but a hefty percentage goes to Apple for distribution.
So, whatever way you look at it, the brand-named band makes much more money selling direct to a loyal fan base than through other channels. Might this cause another round of price adjustments across the board?
