The NEW music business model… people actually pay for free stuff!

Boingboing were quick to tell us all about Jane Siberry’s amazing new online music store where people can hear and download her music for free, or pay. The choice is left to the consumer.

So you can listen to a song like:
Calling All Angels…
and if you like it, you can buy it… (and ‘yes’, Jane gave me permission to stream this song, all I had to do was ask).

Now hang on to your hats folks, it’s what boingboing didn’t tell us that is even more amazing about Jane’s new online music store…

I was listening to some samples and was scrolling through the price options for her album ‘Shushan’ (one option was a price of $0, a gift from jane) and the most amazing thing appeared below the list:

50% of people PAID for the album at a standard price of $11.11. That’s amazing… but there’s more…

  • 8% chose to pay a ‘self determined’ price
  • 34% chose to pay later for a ‘self determined’ price
  • 8% chose the FREE gift from Jane option

In short, 58% of people bought and paid for this album on their first visit, at an average of $10.26.

The implications of this are huge for every business.

I heard of a restaurant that simply asked you pay whatever you thought was FAIR for the meal and their average sale was actually more than when they had a priced menu! (I’m too lazy to find the case study but I do have it somewhere.)

The record industry would have us believe that customers are thieves but Jane Siberry proves that you can make money out of downloadable music and people will pay… and her stats under every song show visitors: how many people pay and how much they pay – which sort of inspires you to pay too…. BRILLIANT!

The reason the recording labels are struggling is because the playing field is no longer even. Jane Siberry can go into a studio, record a great album and market it to millions on the internet for just a few thousand dollars. There are no CDs to press, not artwork to print.

A record label doesn’t operate that way. They pay advances to their artists, spend a fortune on production and artwork, spend hundreds of thousands on marketing the CD, and the only way they know how to make money on that business model is to control all aspects of how, when and where the music is sold… PLUS… DRM the music so it can’t be shared, while violating the integrity of your computer at the same time.

Jane Siberry is building a business model on sharing… record labels are building business models on selling. Jane allows us to say how much the music is worth, record labels tell us how much it is worth regardless of whether we agree or not.

Before I go, a quick story. A lady was buying a small statue from my Brother yesterday. It was slightly damaged and she didn’t want to pay full price ($88) so he said to her, ‘You tell me how much you’d like to pay and you can have it.’ She stumbled and then said, ‘$68’ (which was quite low considering the slight chip on the statue)… so he said ‘OK’. Then something weird happened, she started stammering and suggested it was too low and maybe $80 was a fairer price.

People are basically decent… sometimes they just need a nudge in the right direction, and that’s what Jane Siberry has done brilliantly by showing people what a fair price is and how many people have paid it.

Could you incorporate that in YOUR business. Could a hotel offer a room based on ‘pay us what you think is fair’ and then put a guide on a rate card:
Standard Suite: $110 – 30%, $100 – 70%, $90 – 30.

By the way, this new way of allowing your customer to set the pricing really puts the onus on YOU to perform.

That’s one of the reason why the record labels are losing out. They force us to pay for tracks on CDs that aren’t any good. If Jane Siberry wants to be successful she has to keep making remarkable music and let her fans spread the word.

The music and film industry don’t have to do that, they can pay an artist a few million dollars and know that people will buy the album or see the movie even it is total crap… it’s all about the money.


Published in: on December 5, 2005 at 12:15 am Comments (55)

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