"According to data we analyzed from the RIAA and Ipsos, last year, more than 30% fewer people bought music than did in 2000. This is an enormous decrease. Many have offered theories to explain it — piracy, music quality, you name it — but informed people will tell you that a very big reason is that consumers, inundated with well-priced entertainment choices, think most music is too expensive."
"Most of you know about price elasticity. It’s the basic economic concept that says, for certain goods, when you raise the price, sales will fall disproportionately, and so the increased revenue doesn’t make up for the lack of sales. And if you lower the price, sales will rise disproportionately. Music is an elastic good, and we have now seen that by raising prices, the industry in fact did not make up the revenue, and, in the end, only slowed sales."
"So, eMusic is all about trying to satisfy two concerns that most former music buyers have: a) they aren’t sure what to buy anymore because they don’t hear anything good on the radio, and b) they think music is relatively expensive compared to DVDs, etc. eMusic makes a splendid bargain with our customers: get a better deal on music from us than what you get at iTunes, and we’ll work really hard at helping you discover great music. But in return, you spend more money on music than you normally would. And that’s good for everyone: artists, labels and customers. And here’s the bottom line: the average customer only spends about $12 per year on iTunes; by contrast, the average eMusic customer spends about $168 per year with us. Imagine how different our industry would look if more retailers could serve their customers so fully."
Forgive the guy's usage of "splendid" and the general pitchiness of the whole post; he gets it. For the time being, the big bad RIAA still doesn't want to play with eMusic, but there is a ton of great stuff on there and you can count me in the group of their customers that spends well over $168 a year there.
Bravo, David. Bravo.
(Please take time and read the whole post, here.)