If Teaser Rates Work for Buying Houses, Why Not for Online Music?

INSERT DESCRIPTIONTaken from Amiestreet.com

We’ve blogged repeatedly about innovative pricing schemes, particularly for downloadable music; there was this one, and this one, and this one too.

Now from a reader named Nils Thingvall comes word of a newish indie site called Amie Street (here’s some background) with a pricing twist that might remind some people of adjustable-rate mortgages. From the site’s FAQ:

How is music on Amie Street priced?

Songs on Amie Street start at 0 cents and rise in price the more they are purchased, up to 98 cents. Amie Street uses this pricing method to encourage music lovers to discover and buy new songs.

As a listener, you know that when a song is priced at 98 cents it’s because that song is very popular among our members and is probably worth the 98 cents. At the same time, we keep music affordable so you won’t have to break the bank discovering new music. If you find it first on Amie Street, you get it free!

It’s possible that 98 cents is cheap enough to incentivize people to shop as Amie Street hopes. It’s also very possible that free riders will swamp the site, scoop up as much as they can eat for free, and move on to the next free buffet.

I would love to hear how things turn out for Amie Street.


ClarkW

@5 You are correct, Matt, Miss Dupre did indeed have a song or two on Amie Street at the time of her sudden stardom. As the story goes, the download price was somewhere in the neighborhood of $0.20 when the story broke, and very quickly climbed to $0.99. I was intrigued by the story (having been an independent musician myself) and while I didn't download her song, I did take note that it had been downloaded more than 300,000 times within about a week.

Amie Street pays out at about 66%, which means Miss Dupre was very serendipitously positioned to take sudden and enormous advantage of the power of social networking, to the tune of more than $200,000 by my initial check. Amie Street was one of the best things that ever happened to her, no doubt.

I wouldn't be surprised if she was one of the best things to happen to Amie Street as well...

Andrew

Ironically, one of the albums covers you've posted, Chrome Children on the far right, was available as a free download when it was first released and the entire album is available streaming on the internet. Seems like a funny thing to charge $8 for.

kim hjortholm

Amie Street been around since july 2006

http://www.crunchbase.com/company/amiestreet

It should be noted that the music on Amie Street is DMR free!, thus only a few major artist available yet on the site.

Search for your favorite artist and you will probably find a good alternative which you like

rcs

this won't work once people start getting upset, like this:

everybody likes song: song gets expensive

u go for it believing is great

you find it awful and think you overpaid (this is so subjective, depends on musical taste)

repeat a few times and you get sick of this site

Random

What makes you think teaser rates work for selling homes?

Isn't the current crisis enough to convince you that maybe that was a flawed model?

Mattf

My dad told me not to buy Starbucks way back when; he said it was just a fad. I told him it was a great product and addictive (they must inject extra caffeine in them beans). I wish I hadn't listened to him.... As an amateur musician, Amie Street is the slickest site around and is very addictive. Now, go download my music!

http://amiestreet.com/user/ENGENERATION

Matt

@4

"Why would you be scooping up and eating free music if you weren’t actually interested in it?"

Oh, how little you understand some of these people. They are mentally ill. The proportion of downloaded music from the old Napster that was actually LISTENED to was minuscule; many people simply wanted to have downloaded a ridiculously large number of songs.

katie

another interesting amiestreet feature allows people to "rec" songs they buy and reap a small return when that song's popularity increases.

neb

@13. It is of course possible, but this would be shortsighted for the distributor. Amie Street has an incentive system for people to promote music they buy. Letting the low cost versions be bought up by people helps build a network of promoters. It seems an artist or distributor is better off getting true fans to buy up the cheap ones and letting them promote the music to other users.

jonathan

If Apple would share its data, you have an incredible test in effect now: they have a free song every Tuesday. This week's, for example, is from a band that has only an EP out and the songs are never from big acts. Since itunes may now be the largest retailer, how does the free song impact sales for that artist? For related music, since they have links for that? For the genre, since the songs are all classified by genre? For what other people have bought who also "bought" this free song?

Kirilius

"If Teaser Rates Work for Buying Houses, Why Not for Online Music?"

Because the home buyers hope that the price of their purchase will increase in time and the potential interest increase will be off-set by that.

With online music you cannot resell what you purchased.

Personally I think that "teaser rates" count on potential customer not noticing the real rates that will kick in after some period of time and that are usually buried in the fine print. Therefore I consider them deceitful by definition and try to stay away from such offers ;-)

Joseph S.

Amie Street has been around for 6 months to a year, if my memory serves me correctly. They're a great service for independent and emerging music, and I think they've already achieved a reasonable measure of success.

zbicyclist

I'm surprised nobody has mentioned an obvious source of revenue here: a music distributor may buy up enough cheap versions of the song to indicate that it is popular.

Something similar was rumored to be done in the old days of best seller lists, when there was manual reporting on small samples of bookstores. Over time, some of the sampled booksellers may have become inside knowledge within the book industry.

For Amie Street, this hyping could be a significant source of revenue. Of course, such sales would be denied by the distributor and not necessarily visible to Amie Street.

Matt (New Orleans)

If I recall correctly, this is where Ashley Alexandra Dupre (Elliot Spitzer's call girl) had posted some of her demo songs.

Suffice it to say, when she gained notoriety the price of her songs quickly shot up to the maximum as more and more people checked them out.

MikeM

Why would you be scooping up and eating free music if you weren't actually interested in it? You still have to get some utility out of it, otherwise it's not worth the time and effort to download, or the harddrive space to store, or (perhaps most importantly) the opportunity cost to listen to it.

This sounds like a great model to me. I wish many things could be sold this way. And while I don't really know if it's true, I'm guessing advertising time during network TV spots is sold on a model like this, where song downloads is analogous to ratings.