Friday, May 30, 2008

iTunes Dynamic Pricing - It's a Good Thing

There's been some speculation about whether or not Apple will make some video content available on iTunes on a dynamic pricing model or not. Personally, I think it's a good idea.

Now I know what you're thinking - "Hey Bob, WTF - doesn't that mean we'll be paying more for all that gooey video goodness?" Yes and no.

Think about it for a second - if everything was $1.99 per download - then the studios would say "it's not enough" and would limit the content. On the flip side, if the studios thought $4.99 was a better price, say, for an episode of The Sopranos then people could vote with their feet and just not buy it. Once the numbers trailed off - the studio could then lower the price back to $2.99 and see what happens.

Sure, there will be some pissed off people who bought the $4.99 episode when the price goes down to $2.99 - but if it was worth $4.99 when you downloaded it - it's probably actually worth $4.99 to you now.

Just have a look at the iPhone. It came out at a higher price, and then they lowered the price (much to the chagrin of those early adopters) to boost demand. And - it WORKED.

So you may not be enough of a fan of a show to fork over $2.99 for an episode, but what if they dropped the price (for a limited time - or for a couple of pilot episodes) to $0.49? Would you be interested then? Maybe.

And that's good for everyone. You get a "deal" on a show that you've never seen - or one that sounds interesting that you would have never really watched - and the studios then have to "earn" your viewership of future episodes by keeping the quality of the show high.

I'll admit - there is still something sort of FUD factor when an episode of 24 goes for $1.99 one day, then $2.14 the next and $1.61 the next. But the point is - as a series becomes more popular, then the studios have a bigger upside and they can test market prices - or aggressively try to stimulate demand for a new series or movie - by playing with the prices.

In the end, that whole market-driven thing is good for everyone.

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