In an effort to slow down massive financial losses, Warner Music Group will be one of the first of the four major record labels to test variable pricing. During the latter half of May, WMG will partner with the Indianapolis based company Digonex to pilot a variable pricing program for its digital albums. The change comes about six months after WMG saw its stock hit a record low of $9 per share in November of 2007. As the home or parent label to Plies, T.I., Gnarls Barkley, Flo Rida, Bun B and Diddy, WMG is one of the few labels whose artists are still selling physical albums. Yet, the current marketplace indicates a shift toward digital media is coming sooner rather than later.
After setting the single-week record for the most digital sales by moving 470,000 copies of the single “Low,” Flo Rida is familiar with the format.
“They’re talking about moving to some other things besides CDs also,”Flo Rida tells HipHopDX. “It was just tapes and everything, now it’s CDs and on to something else. It’s all good. I don’t have anything bad to say about it. I’m getting success off of it.”
Music industry analyst Paul Resnikoff describes the program as a hybrid which involves “real-time demand data and constantly-changing price points.” The new system would be more in tune with the customer’s demand for a product, essentially allowing them to dictate the price of an album by their likes and dislikes.
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WMG also adds that the test will be for a limited amount of time and titles and participating retailers are not being announced. Now that fans with Internet access can freely download virtually any album via peer-to-peer networks and blogs with little or no legal repercussions, a larger question remains. Will people purchase legal, digital copies of albums when they can illegally download them for free?
