Yeah, People Still Buy Songs, Especially When They’re 69 Cents

There’s an experiment going on in Apple’s iTunes Store that not many are paying attention to, but it just might prolong the download side of the music business for a few more years. It’s true that streaming is all the rage, with subscription numbers increasing at a steady pace while the download business is falling like a rock. But not so fast – price is an issue here, just like with everything else.

As I illustrated in my article last week about the upcoming $5 streaming tiers for Pandora and Amazon, price is the way into a music consumer’s heart, and downloads are no different in that regard. As a prime example, few months ago iTunes launched a “Great 69 cents Songs” section, and while that hasn’t caused the music loving public to buy downloads in record numbers again, something else did happen that might be even more appealing to both artist and label. Yes, there were some additional sales, but what’s really interesting is that radio airplay and streams actually went up for songs in this discount section.

Hit songs are now usually priced at $1.29 on iTunes, which seems to be beyond the price resistance point for most consumers, so it’s no surprise that download sales are accelerating in the wrong direction. Even at $0.99, download numbers would continue to fall, but a 69 cents price point is appealing in that it’s almost approaching an impulse buy.

That said, the major record labels tend to only keep the songs in this section at this price for a short period of time and then return them to $1.29. Guess what? The sales then drop off.

There’s some additional strategy to placing a release in this section though, as it’s a way to keep a song on the charts when its popularity begins to wane, or to give it a boost if it’s bubbling just under the top tier of one of the various charts. [Read more on Forbes…]