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Originally Posted by MarsBot  Actually these studies are smart, not stupid. It's basic economics - the law of supply and demand. What the guy is saying is that if record companies (and artists) lower the prices of digital downloads THEY WILL MAKE A LOT MORE MONEY. So if you want more money to buy more gear, then lower the prices of downloads and you'll sell a LOT more music. |
Wrong. It's more complicated than that. People who think .99 is a fine price for MP3's don't really care if it's .88 or 1.29 or 1.49. People who think .99 is too much are just as likely to find .35 to be too much. In both cases the demand is pretty inflexible.
As it is, people who think .99 is too much aren't likely to buy any more music if it was .89 or .79 - so they have cut themselves out of the consumption equation. It's more likely that the labels would make more money by raising their prices than by lowering because they'd have to cut VERY deep down to attract those penny-pinchers who feel .99 is a king's ransom.
Those customers too are the same ones who get lots of stuff for free from pirate sites and as we all know it's hard to compete with free.