Can you give it all away? What about an open pricing model? Given the option, will anybody pay a reasonable price? How do content providers set the price of content?
The answer may lie in a new music industry pricing model.
I came across the model in a last.fm post that offers five alternative business models to a reeling music industry. One of the models the post discusses is "pay by popularity."
The songs by independent artists listed on Amiestreet.com start out free, but they rise in price as they become popular. The site lets social market forces set the price.
It's an intriguing model because it lets music downloaders actually create the value in the site's songs - more popular means more price. And as music downloaders create song value they also create a real revenue stream for both the site and the artists, who keep 70% of revenues.
Meanwhile, Amiesteet.com rewards frequent downloaders with credits to purchase more songs when they recommend songs to their friends. And for independent artists, the site is a way to create some buzz around their work.
In a sense, what the site is offering is a viral pricing model with a direct line of revenue to the artist, instead of a model that seeks to find value in sales of other merchandise or concert tickets. Because the songs start off free, downloaders are motivated to be ahead of the curve and get songs before they're popular. Recommendations to friends drive further interest and therefore a rising price, although the top price 98 cents is not a huge barrier for someone to purchase a popular song that all their friends like.
Amazon is an investor in the site, and Amiestreet.com is one of Mike Arrington's favorite Web 2.0 sites.
When you think about, the social market is always right. It will always determine success or failure. People will either like or not like what you have to offer. So why not go the people right from the start?
