Music industry watch

Magnatunes update

I mentioned Magnatunes a few months ago and a couple of days ago John Buckmann posted a complete rundown on a sample track to see how people paid for the tracks given Magnatunes' pay what you feel the album is worth pricing model.

Interesting results -- check out his entire mail.

Posted to the pho list by John Buckmann:

I thought pho-sters would be interesting the results of my tests of a variable pricing scheme on Magnatune.

On Magnatune, for 3 months I've tried a "pay what you feel the album is worth" system for buying downloadable albums. (for example)

People can choose to pay between $5 and $18 for an album, with an $8 default being the 'recommended' price. Note that the buyer gets nothing extra by paying more than the $5 minimum, other than a "warm fuzzy feeling"

Here are the results so far (after 3 months of the site being up)

44% of buyers pay $8 (the default)
32% pay less (between $5 and $7)
24% pay more than $8 (between $9 and $18)

In total dollars earned:
42% of revenue comes from the $8 purchases
21% comes from purchases $5 to $7
37% comes from purchases $9 to $18

The quantity purchased at each price point is:

$5: 21% of purchases
$6: 10%
$7: 1%
$8: 44%
$9: 1%
$10: 9%
$11: 0%
$12: 2%
$13: 0%
$14: 2%
$15: 1%
$16: 8%
$17: 1%
$18: 0%

My analysis:

• more people pay the recommended $8
• $10 is a popular price to pick -- this might be a "sweet spot"
• a fair number of people double the recommended price and pay $16
• Not shown on this analysis is that $5 is a popular price when people buy several albums at once (people seem self-justified in lowering how much they pay per album when they buy several albums)

-john

Posted by Mayhem at September 25, 2003 11:55 AM