There’s a lot of debate and discussion about entertainment price points right now, as music and video distributors work to best tackle emerging retail platforms online. To attract interest in a new indie product, sometimes discounted price points are a great marketing strategy, and Amazon MP3 and VOD are doing their best to lead this charge with regular discounts for music and movies/TV. Recently, iTunes has also embarked on more aggressive discounts for its music and video. The goal for the portal, is to drive users to access and consume on the store in hopes of creating more frequency (as if to say “See how easy it is to buy a song from Amazon MP3, now keep doing it”). The discount goal for content producers and distributors is to gain awareness, and then bring the price point back to normal so that the product can enjoy its newfound awareness in the same revenue leagues as more established product.
One of the biggest examples of this strategy (one that utilized Amazon MP3), is the new Arcade Fire album, The Suburbs. For a limited time, the album was available to purchase on Amazon MP3, for $3.99, a steep discount compared to its availability on iTunes at $9.99. The album sold well amongst titles on iTunes (The Suburbs is still on the store’s top spot as of this afternoon). But, that Amazon MP3 sale may have made all the difference in terms of the album landing at the #1 spot at this past week’s Billboard charts. The album was well-reviewed and highly-anticipated, but selling 156,000 units in the first week was beyond expectations. The Billboard charts measure units and not revenue, so by making the album available for almost-free on Amazon MP3, the band saw its ranking soar. Rolling Stone concludes that the Amazon discount was a major factor in the chart debut:
Sales of The Suburbs were greatly aided by an Amazon promotion offering digital downloads for $3.99. Nielsen SoundScan reveals that 62 percent, or 97,000 copies, of Suburbs sales came from digital purchases. The new album improves on Neon Bible‘s Number Two debut (with 92,000 copies sold) in 2007.
In other words, The Suburbs sold more units through digital stores in its first week, than the band’s last album sold in all stores in its first week. Just like other entertainment retail businesses, starting at #1 is a great way to stir momentum for a long shelf life. The healthy debate starts when you begin exploring how much revenue is actually earned: what would you prefer, making more money or having a more popular release? Those two outcomes are not always in sync.