As the music industry watches in horror while physical CD sales tumble and digital sales fail to bridge the gap, online MP3 retailers are trying to stem the bleeding with an age-old technique: slashing prices.
Some new releases are being priced at a mere $3.99 for a limited time on Amazon MP3, including last week’s top-selling album in both platforms, U2’s “No Line on the Horizon”; the company offers some full album downloads for 99 cents. Apple’s iTunes store runs spotlight specials for as little as $4.99. And subscription-based service Rhapsody routinely has deals for $6.99.
On average, a regularly priced full album digital download costs about $10.
Online retailers are keeping tight-lipped about these bargain-basement prices, usually available for anywhere from a day to several weeks, but industry analysts say the reason behind them is simple: to attract new customers, particularly the vast majority of people who aren’t in the habit of downloading music.
Amazon MP3, a digital download offshoot of Amazon.com that launched in 2007, is in a particularly good position to convert the physical-CD-buying masses. “Amazon has customer relationships with virtually all of those people because everybody, at one time or another, has registered for an Amazon account and bought a CD from them,” says Eric Garland, the chief executive of online media metrics service Big Champagne, which tracks downloading activity.
And it’s not necessarily about trying to muscle in on the well-established turf owned by iTunes, which in 2008 became the number one music retailer in the United States. “The way one Amazon guy put it to me once: We’re not trying to steal their share of the pie, we’re trying to bake a new pie,” Garland says.
One consumer happily dishing up that pie is Dan Jungmann, 41, of Niceville, Fla., who discovered Amazon MP3 while shopping for other items on…