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Digital Audio Insider is David Harrell's blog about the economics of music and other digital content. I write from the perspective of a musican who has self-released four albums with the indie rock band the Layaways.
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June 12, 2007
Rah-Rah for Lalaby David Harrell
While I've tweaked Lala.com in the past with my contention that its CD-trading operation is simply a low-tech way to "sell" music downloads (see LaLa.com Owes Me Sixty Cents), I'm impressed by its recent developments.
As a music fan, the free streams are great and the site is easier to use than the interface for my paid subscription to Yahoo Music Unlimited (though it lacks a true pause function and you can't fast forward or rewind a track, no doubt because of licensing restrictions).
But from a business standpoint (Lala hopes to underwrite the free streams by selling CDs and digital albums), I'm in agreement with Jon Healey at Bit Player:
Given the strengths and weaknesses of its plans, I could see a fully functional Lala luring more than a few music fans away from subscription services and webcasters. But I'd be surprised if it found a way to make more than $140 million in its first two years, which is the amount of royalties Nguyen said the service will be paying the labels and music publishers.Lala is currently selling CDs (with fulfillment by Newbury Comics) at dirt-cheap prices -- I purchased a CD several weeks ago for $7.99 plus $2.15 in shipping. Doesn't seem like there's a lot of margin at those prices.
According to the Wall Street Journal's coverage, Lala will attempt to vary prices based on consumer demand and individual usage:
Lala's pricing model, too, runs counter to the way the music industry has done things. Prices will be "dynamic," or based on demand for a particular title and other factors, including the existing content of a user's personal music library."Other factors" sounds a bit like price discrimination. In Lala's favor, it's positioning the variable pricing as reward system, analogous to "comps" at a casino. Perhaps consumers will view it favorably, but I suspect it's something of a long shot. Back in 2000, Amazon.com conducted some initial experiments with online price discrimination and customers screamed bloody murder.
While price discrimination is generally accepted for things like airline tickets (and my favorite personal example -- a Chicago liquor store where all prices go up by 20% after midnight) I don't think it's going to fly for commodity items such as CDs (or digital downloads).
related: Lala.com Owes Me Sixty Cents, Is Lala.com A Digital Retailer?
tags: digital music Lala.com price discrimination
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Popular Posts
A Long Tail Experiment
By the Numbers: Using Last.fm Statistics to Quantify Audience Devotion
Lala.com Owes Me Sixty Cents
An Interview with Jonathan Segel of Camper Van Beethoven
Price Elasticity of Demand for McCartney
Sony and eMusic: What I Missed
The Digital Pricing Conundrum series:
Part One Part Two Part Three Part Four
THE LAYAWAYS
Out Now -- "Maybe Next Year" -- The New Holiday Album:
"This is a sweet treat, deliciously musical without being overbaked for mass media consumption." -- Hyperbolium
"Perfect listening to accompany whatever holiday preparations you may be making today." -- Bag of Songs
O Christmas Tree - free mp3 lyrics and song details
Away In A Manger - free mp3
Download from eMusic, iTunes, Amazon MP3, or Bandcamp. Listen to free streams at Last.fm.
"...about as melodic and hooky as indie pop can get." -- Absolute Powerpop
"Their laid-back, '60s era sounds are absolutely delightening." -- 3hive
"...melodic, garage-influenced shoegaze." -- RCRD LBL
Where The Conversation Ends - free mp3
January - free mp3
Keep It To Yourself - free mp3
Download from eMusic, iTunes, Amazon MP3, or CD Baby, stream it at Last.fm or Napster.
"The Layaways make fine indie pop. Hushed vocals interweave with understated buzzing guitars. The whole LP is a revelation from the start." -- Lost Music
"Catchy Guided by Voices-like rockers who lay it on sweetly and sincerely, just like Lionel Richie." -- WRUV Radio
Silence - free mp3 lyrics and song details
The Long Night - free mp3
Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.
"These are songs that you want to take home with you, curl up with, hold them close -- and pray that they are still with you when you wake up." -- The Big Takeover
Let Me In - free mp3
Ocean Blue - free mp3
Download from eMusic, Amazon MP3, or iTunes, stream it at Last.fm, Napster, or Rhapsody.
More Layaways downloads:
the layaways website