I don’t have the statistics, but many different players and websites including iTunes and Last.fm include the ability to track what music you listen to. In theory this data from many users can be aggregated. If that happened the picture would look something like a bell curve.
The top dominates
Most of the music is from artists the listener likes a lot. This is right tail on a bell curve. For example 50% of songs might come from ten artists, 80% from 20 artists, and 90% from 50 artists. The other 10% might come from hundreds.
The same is true for albums: the favorite album by the favorite artist will be even more dominant than the artist was.
Selling as generic
The problem is that the industry treats songs as equal units. You pay roughly the same price for a song you’ve listened to 1000 times as one you listened to once, or a song bought as a gag. But when you actually look at the cost per listen it becomes apparent this is simply silly.
The songs you love cost you tiny amounts: after the hundredth listen to a $0.99 song it’s less than one cent! The songs you don’t love cost you more per listen: up to that same $0.99 for listening to it once.
Shouldn’t the opposite be true? Wouldn’t you pay more money for the song you love? Wouldn’t you rather pay less for the song you would delete from your collection except that you never look in that folder anyway?
My belief is that music should look like the following pricing model. Note that the numbers are fabricated and that actuaries and statisticians could provide much better figures. This is only a rough model.
For the first ten listens it costs a cent. Period. If you like the song and run through ten listens you pay a cent. If you decide you don’t like it and give up after the first time, it costs a cent. For the next ten listens it costs a dime. Listen 20 times and you’ve paid $0.11. For the next 50 times you listen to it, that’s $0.20. After 70 total listens you would have paid $0.31. And for the 100 listens after that, it’s $0.68 which brings you to the $0.99 original price.
The money distribution is staggered as well. The artist makes less money off of the first tier and more of the successive tiers, while the labels and distributors make more on earlier and less on later tiers.
There would be some other choices with this model. If you knew you’d want the song for 170 listens at least, you could pay an initial fee of $0.89 or such, giving you a discount for buying the song outright. You could also pay the difference on $0.89 up to 70 listens.
Even after paying $0.99 (or $0.89 if you bought it early) you could choose to pay more. That money would go almost entirely to the artist.
The model’s logic
The consumer value behind this model is two fold. One is to save you money on songs you rarely listen to. The other is to give you the freedom to explore music. The current flat price model is prohibitive: how many times would you roll the dice at $0.99 per roll?
The model also has powerful incentives for the label, distributor, and artist. People would explore more music and pay a cent each time, but that would add up quickly. The current prohibitive model generates less revenue than the new model would for all parties involved.
This model can easily be extended to be used with movies, television, and text. The tiering would be different, obviously. It would not be as effective for news as fiction. But that’s a detail that can be overcome by changing the target of the model.
Instead of expecting you to pay $0.01 for each episode of the Daily Show each time you watch it, you would pay $0.01 for the first three episodes you watched. Due to that sort of content being unlimited in time (they continue to make new episodes indefinitely) you wouldn’t cut off at $0.99. The probable solution would be to tier over an entire season and fix the top-price on a per-season basis.
The option to have advertising fits nicely into this general model. The advertisers can choose to pay for a tier for some number of viewers: when you go to view, listen, or read the choice is yours to accept the advertiser’s offer and instead of paying you would watch, read, or listen to a short advertisement for the duration of that tier.
I believe this sort of model, again with the statistics to back up a more refined pricing and tiering system than I’ve presented, will be a boon to listeners, viewers, and readers. It will also benefit the content creators and distributors. I hope to see this model become a standard operating model for content.
Let me know what you think of this model. What’s wrong with it? What would make it better?