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Another Spin On The Music Industry

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Postby bleach168 » Sat Nov 19, 2005 7:55 pm

JTWood wrote:
bleach168 wrote:
The answer is that pricing sends a signal. People have come to believe that “you get what you pay for.”


This phenomenon is unique to american consumers. People in other countries aren't so lazy.

Really? I'd like to read more about that. Do you have any links that you can give me about this dichotomy?


Here is an article about how a gaming company has to market their product differently in America and South Korea. Here is the relevant part,

The Retail Question

Where does retail distribution come in? Garriott says, "The answer to that is different depending on what market you’re looking at. If you’re looking at the US market, retail is critical. However, if you look at Asia, it’s very unimportant. As a mater of fact, there’s no retail for MMP games in Korea, because retail space never developed in those markets.

"If you look at the US market, it’s very important, but for different reasons. The retail space is a great place to do marketing. It lends credibility to your product. Our model in Korea is to give away the client, and then charge a subscription fee, and that subscription fee is much higher than it is in the US. A product like Lineage has a $26 a month subscription fee in Korea. But you get the client for free. In the US we tried to actually give away the client, but there’s an interesting dynamic, or difference in culture between the US and Korea."

Garriott continues, “In Korea, if you go to a customer and say ‘I want to sell you a product, and then charge a monthly fee,’ they say, ‘You’re crazy. Why would I buy a product?’ In the US it’s actually the opposite. If you go to a customer and say ‘Here is a free product, I’d like you to try it and then pay me a monthly fee.’ Most Americans say, ‘The value of this product is exactly what I pay for it.’ So when you give it to them free, they think it’s worthless."

"From our market research and studies, if we sell them the product at retail, they like the product more, they have more value to it, they think it’s worth what they paid for it, and they try to get that value back on the computer, learning about the game, and then they have a higher chance of paying a subscription fee afterwards.

"In the US retail is critical,” Garriott concludes, “And it’s going to continue to be critical, just by the nature of our culture. I think we’ll have more online downloads and direct online selling. Of course it’s going to become bigger, and more prevalent, but retail is always going to be a critical part."


Link
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Postby JTWood » Sat Nov 19, 2005 8:00 pm

That's interesting. I'll have to look around for more on that.

Thanks... ;-D
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Postby Tavish » Sat Nov 19, 2005 8:27 pm

Nice theory, but I'm not buying into it. The music labels already have tremendous power over the musicians. Holding the ultimate distrubition hammer allows them to make or break which ever bands they want. They can turn run of the mill crap artists into superstars with high dollar MTV videos and bullying radio playtime, or they can break uppity bands like Pearl Jam by cutting off their voice to the general public.

Different price points is exactly what it appears to be. A way to make extra money on the latest releases and hot new thing. Theatres do the exact same thing, new release movies are in the premium theatres, when demand for the movie dwindles (or is non-existant) it is shifted to the bargin bin $1 theatres.
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Postby bronxxbomber » Sat Nov 19, 2005 8:58 pm

Tavish wrote:Nice theory, but I'm not buying into it. The music labels already have tremendous power over the musicians. Holding the ultimate distrubition hammer allows them to make or break which ever bands they want. They can turn run of the mill crap artists into superstars with high dollar MTV videos and bullying radio playtime, or they can break uppity bands like Pearl Jam by cutting off their voice to the general public.

Different price points is exactly what it appears to be. A way to make extra money on the latest releases and hot new thing. Theatres do the exact same thing, new release movies are in the premium theatres, when demand for the movie dwindles (or is non-existant) it is shifted to the bargin bin $1 theatres.

I don't know about releases in different cinemas, but i do know that pretty much all the cinemas in nyc are premium. or they get you to believe it because you can get a ticket under $9.50 unless they have student specials, you're really old, or really young. I know some spots where its $15 :-t . I just really believe that Music companies see an opportunity to cash in big and it's a smart (economic-wise) move and people might be suckered into it. I remember when Apple first came out with their .99 model and I thought it was rediculous, but people started warming up to it. I can see people warming up to a 2.50 model as well.
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Postby Tavish » Sat Nov 19, 2005 9:33 pm

bronxxbomber wrote:I don't know about releases in different cinemas, but i do know that pretty much all the cinemas in nyc are premium. or they get you to believe it because you can get a ticket under $9.50 unless they have student specials, you're really old, or really young. I know some spots where its $15 :-t .


They don't have second-run theatres in New York?
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Postby bronxxbomber » Sat Nov 19, 2005 10:30 pm

Tavish wrote:
bronxxbomber wrote:I don't know about releases in different cinemas, but i do know that pretty much all the cinemas in nyc are premium. or they get you to believe it because you can get a ticket under $9.50 unless they have student specials, you're really old, or really young. I know some spots where its $15 :-t .


They don't have second-run theatres in New York?

I haven't seen them in NYC for a while. They closed down the last one I knew a few years ago. It used to play movies that recently went off for $2 or $3 in Mid-town Manhattan.
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Postby Madison » Sat Nov 19, 2005 11:05 pm

I disagree with the author.

I belive the 2 price points are simple.

Who's going to go out searching high and low on the net to steal an old song, when you can have it for a tiny cost (99 cents), and it's legal?

A song that was just released is even harder to find and steal online, so if someone really has to have it now, they will pony up the $2.49 to have it the instant it comes out. They simply are trying to capitalize on the people who must have the latest and greatest of everything, regardless of price. Not a bad move, but it won't work as well as they think.


Another way of looking at it.......Best Buy ran Eminem's Encore CD for $9.99 the day it hit. I went purchased it for $9.99 because I belived it was worth it at that price. Had it been $17.99 like everywhere else (which is too much in my opinion), I'd have mentioned to a few friends that I'd like to have that CD, and *poof*, I'd have had a copy free of charge within a couple of weeks.

Just because something is rather cheap, that doesn't mean the quality isn't good.

Bleach mentioned Americans having to feel they get what they pay for, and in my case, he's right. Eminem's Encore CD was worth $9.99 to me on the day it hit, but no single music CD is worth $17.99 to me. By pricing it reasonably, the music industry and Best Buy made a sale it otherwise would not have made.

Same goes for movies. I don't go to the theatre because quite frankly I'm not going to pay $8+ to see a movie no matter what it is. Now if they would bring the prices down to a reasonable level, that could change, but until then, file sharing and DVD's are just fine with me.
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