Amazon and the Great MP3 Price Test

I’ve been quite the fan of Amazon’s MP3 Storeto the point I have been conditioned to check their daily deal as part of my morning routine in hopes of snagging a new release (like U2 or Lily Allen) priced around $3.99 and goodies from the vault (like older catalogue Tom Petty or Beastie Boys) for as low as $1.99.

So I was surprised when Amazon’s MP3 store replaced its Five for $5 Fridays (another regular promotion they have been running in addition to their daily deal) with Fifty MP3 Albums for $5for the Month of May. I’ve done a lot of deep discounting of digital items in the past, both of PC download games and virtual goods, and every time I had a prolonged sale (more than a week long) I found that a) promotions tended to get stale and b) the performance waned. In fact the most aggressive timing, like one-day sales, seemed to drive more frenzied buying and perform well. Lo and behold, for me the hardcore user, I faced the 2nd Friday in May expecting my Friday specials and instead got rehashed promos about the same albums I’d already reviewed/bought.

What I think is really going on here is what (David Harrell alluded to back in February) – we’re watching a huge Amazon’s price test, trying to prove the point suggested by an unnamed Amazon official : “As soon as we wise up and realize that online albums are worth about $5, the music industry will be fixed.” And what better way than to put a varied list of recently released albums, greatest hits packages, and more esoteric releases into a huge sale at the $5 price point?

So nearly two weeks into the sale, what, if anything can we tell about how its working? For starters, looking at the current Top 50 Download MP3 Artists you can glean some insights:

  • All but one of the top 14 selling artists on Amazon has an album on sale as part of the $5 promotion or was deeply discounted as a Daily Deal during May
  • Just over one-third of Amazon’s Top 50 currently have an album priced at $5 or less (two Pink Floyd albums are under $5 but not part of the 50 for $5 promotion)
  • Billboard’s Top 200 for the same period barely makes a showing in the Amazon Top 50 Artists: The first Billboard listed artist is Lady Gaga at #15 on the Amazon Top Artists list; #1 Bob Dylan on Billboard checks in at #17 on Amazon while Billboard’s #3 Rascal Flatts shows up at #47. In fact only 16 artists appear on both the Top 50 on Amazon and Billboard
  • While some of the best selling $5 promo albums are for greatest hits packages, like Marvin Gaye, Aerosmith, the Grateful Dead and Etta James, three-quarters of the $5 albums are for newer acts that are not on or barely reach the Billboard Top 100: Neko Case (#5 on Amazon, #95 on Billboard), The Decemberists (#16 on Amazon, #77 on Billboard), Francesca Battiselli (#33 on Amazon, #91 on Billboard) and Anberlin, Metric and Michael Franti who don’t make the Billboard Top 100 at all.

Granted there are caveats in looking at Amazon’s list versus Billboard (Amazon is a subcomponent of the Billboard list and their MP3 store is less mainstream than iTunes ; iTunes reflects some diversity from the Billboard list as well, but does have acts like Taylor Swift, Rascal Flatts, Kelly Clarkson and Miley Cyrus all comfortably in the top 20). But the $5 promotion appears to be breathing more life into up-and-coming artists as visitors are more prone to giving something a chance at the lower price.

So while it looks like the reduced pricing is driving sales of some artists, does Amazon have enough data to convince record labels that the $5 price generates enough velocity to “fix” the industry? I know it’s worked for me – I’ve bought more music and whole albums and sampled more new artists in the last year than I have over the past several years. Guess we’ll get more clues in the Great Amazon Price Test come June…

May 12th Top 20 Artists Snapshot

Amazon’s Top 50 list is constantly changing, so here is a snapshot of the top 20 artists for the late afternoon on May 12th with details about whether the artist has an album in the current 50 for $5 promotion or was featured as a “Deal of the Day” in the last month:

Top 50 Download MP3 Artists Billboard Top 100ArtistFifty for $5 PromoDeal of the Day
1Steve Earle5/11
2Merle Haggard5/10
3 M. Giacchino (Star Trek)
4Marvin Gaye$5
593Neko Case$5
6Isaac Hayes5/9
8Grateful Dead$5
9Death Cab for Cutie$5
10Etta James$5
1157Chrisette Michele5/4
12Kanye West$5
13Matthew West5/7
14Ben Harper and…5/5
155Lady Gaga
1677The Decemberists
171Bob Dylan
189Taylor Swift
19TV on the Radio$5
2018Depeche Mode4/21

One thought on “Amazon and the Great MP3 Price Test”

  1. Good post Eric. Data and analytics always tell the real story and I agree with your thinking here.

    Regards – Joe

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