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MP3s with Variable Pricing: a record company dream from Passalong

passalongApple’s called it confusing to customers.  Other retailers have reportedly looked at it but balked.  But variable pricing remains a feature music labels want.  They want to bundle songs and albums, price relative to changing demand.  They want to discount an old title, push a new one.   They want the freedom to use pricing as a sales tool.  They’ve demanded it, and maneuvered for it.  They’ve threatened. They’ve nearly begged for it.   But so far, fixed pricing on digital music remains the norm.

Tennessee based Passalong Networks, a provider of white label MP3 stores, is going to give it a try.   White Label to the label’s white knight?  That’s not likely, but it won’t keep them from testing the concept.

Passalong is a company name most people won’t know but there’s a decent chance people have unknowingly shopped at their stores.  As a “white label” service, they provides the web infrastructure, music and back end (licensed music catalog, transaction processing ) for other parties music stores.  Think a light version of iTunes with your own label instead of Apple’s.  It’s a little like SnoCap, in some ways, a little like running your own site with print-on-demand shop CafePress.

Have a charity event? Passalong can give you a music store online to support it (Red Cross is a client). Likewise, all the way up to a band’s own websites or bigger corporate offerings (Video Music Awards are another client). Passalong can power it through a product they call StoreBlocks.   (Passalong also provides business to business tools for ringtones and concert information).

Late last week, Passalong partnered with Indiana econometric firmDigonex Technologies and Canadian record label and music management company Nettwerk Music Group to experiment with a music store that offers variable priced MP3s.  Singles will be dynamically priced at 33cents 66 cents or 99cents.  Albums can vary between $3.30 and $9..99.  Digonex’s pricing engine can change the prices on a weekly basis depending on consumer behavior. Every Wednesday there will be updates.

Initially, for the test period (which will run through the end of the year) the pilot program will include about 150 albums and 1,500 singles.  They will be available throughout Passalong’s store network which includes about 130 music download sites. Which Nettwerk artists will participate (and whether the group will include artist’s signed to other labels but managed by Nettwerk) is unclear. Potential names affiliated with Nettwerk include Avril Levigne, The Barenaked Ladies, Sarah McLachlan, Dido and Guster.

The size of the pilot program is tiny, especially relative to the near 3m songs Passalong has in its library through various license agreements.  Around 2m of those songs are also DRM-Free from Independent artists, small labels and EMI.   

The company’s will monitor the small offering to see how it does.  It’s likely, the big music labels will be watching too.  Passalong already has a deal in place with EMI to sell their copyright free (drm-free) titles.  If this experiment works, it’s a real possibility EMI might want to join.  Passalong’s VP of Strategic Marketing was former Sr. VP at EMI so you can bet they have a decent line of communication.

If it catches it on, which seems unlikely, others may follow suit or labels may use it in negotiations with iTunes or Amazon’s newly launched music store.   More likely, the test will come and go just like little the noticed press release announcing it. 

Related Content:
EMI licenses catalog to Passalong
Amazon MP3 Store now Live
Apple and Universal Battling
SnoCap in Trouble, Lays Off Staff
DRM and the Shrinking List of Digital Music Stores
EMI, DRM and the Labels’ Last Chances

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