Olson’s Observations

Technology. Innovation. Science. VC. Media. :: by Eric Olson

The Music Market

with 4 comments

Amie StreetHaving spent most of my formative years following the stock market I have a natural affinity for the market system. It is fascinating how markets work to find prices and it so exciting when you find that rare diamond in the rough that you know everyone else has undervalued. It should be said that I didn’t spend my childhood years only looking at stocks. I actually spent a lot of my time with friends and family and behind my drums.

I have learned a lot about the music business in my twelve plus years of drumming. It’s a tough business and it is very hard for artists to get discovered. Or maybe I should say was hard for artists to get discovered. With the advent of web services like MySpace artists that may never have been found are making good livings from their music and are even being offered deals from major labels. A worldwide market has been opened to musicians and they are leveraging their creativity to grab a piece of it.

However, why does it have to stop there? Why can’t there be a system that allows people to determine what a specific piece of music is worth? Why should people pay $1 per song regardless of the artist? It seems logical that artists with bigger names and followings should command more for their music than newer artists. Also, people may be more apt to try a new artist if the price per song were less. Well, it looks like the guys from Amie Street (a Providence, RI based company) were asking the same questions and they have, in effect, built a music market.

Amie Street allows prices for pieces of music to fluctuate based on artist interest and demand. The songs start at a great price, free, and can climb all the way to 98 cents. This application of market pricing to music is really interesting and makes a lot of sense. Artists, like stocks, have different statures the price of their music should fluctuate accordingly. If the market aspect of Amie Street wasn’t already cool enough, the guys have also built in a social network piece to the application that allows users to become friends and recommend music to one another. (I would recommend checking all of these features out for yourself as I am sure I am not doing Amie Street justice.) While Amie Street is very innovative and, to use the Boston vernacular, wicked awesome, their application is also very disruptive to the music industry as it stands today.

The disruptive power of Amie Street lies in the market pricing. Music labels may fear this type of pricing model because it throws some uncertainty into the mix. Specifically, it hampers their ability to determine how much they will make from a certain recording. Sure, there is uncertainty in the music business anyway and a lot of it to be sure but what the labels can be certain of is the price of their product (since the set it). They can then determine their profit assumptions based on how many of a certain recording they think they can sell. Enter market pricing. Now labels don’t know what their product will sell for let alone if the artists will even be well received.

In the end of the day I would argue that labels should give the market pricing model a try and the reason why is simple. People who would not have bought an artist’s song for $1 because they did not know them may try the artist out for 20 cents and, if they like them, they will tell their friends and the artist’s music price will begin to rise. Instead of having a good recording no one bought, the label has a hit and at no more risk to them than the traditional model (this risk to labels of the market pricing model is really just perceived risk - overall they will probably benefit).

The development of the music market by Amie Street is very exciting in that it has the potential to revolutionize how music is sold and how other products may be sold as well. Why couldn’t movies be sold through this model? Or how about books? The potential is endless. That said, I urge you to get off your butt and go check out Amie Street. I think you’ll enjoy it and it may cause you to think of other that could be sold via market pricing.

Written by Eric Olson

September 13th, 2006 at 10:18 pm

4 Responses to 'The Music Market'

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  1. Amie St For Music Downloads Market Priced…

    Amie Street, Rhode Island-based music site, has reinvented the online music business model by allowing prices for pieces of music to fluctuate based on artist interest and demand. The songs start out free and rise in price all the way…

    Somewhat Frank

    19 Sep 06 at 3:15 am

  2. [...] Nice writeup by drummer/Feedburner guru Eric over at Ventureweek.com discussing Amie Street, impact on record labels, and creating efficent markets.  Check it out. Trackback Posted in Uncategorized, Buzz by Lucas on September 20th, 2006 21:51:16 [...]

  3. [...] That’s why I was excited when I heard, through my friends Eric and Matt, that a new service, Amie St, is “developing a marketplace for music where the price per song is determined by market demand”: Amie Streetallows prices for pieces of music to fluctuate based on artist interestand demand. The songs start at a great price, free, and can climb allthe way to 98 cents. [From Eric] [...]

  4. Excellent article Eric and a shrewd bit of detective work on your part to dig something like this out of the mix - for small labels like my own(Palooka uk) Amie Street could just be the tipping point in regards to those ever so vital sales figures. Not bad for a drummer.(heh heh) Seriously though, first class article. from bobby james henry(composer with Mute Songs and director of Palooka Uk.)

    bobbyjameshenry

    22 Oct 06 at 5:36 am

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