Wired: Sony’s RED Agrees to Price Music Reasonably: 15 Cents and Up

By Eliot Van Buskirk

RED, Sony Music’s third-party distribution arm, has just become the first major-label division to price music at 15 cents on the AmieStreet online music store. As with other music sold there, RED’s tracks (from My Morning Jacket, Third Eye Blind and many others) will increase in price as demand increases to a maximum of 98 cents.

Pricing this flexible makes iTunes’ move to three price points look restrictive (not to mention expensive) by comparison. The other crucial aspect of Amie Street’s model is that you can play the site almost like a videogame in which you’re a talent scout on the prowl for promising up-and-comers. Say you spot a low-priced band (meaning that they have yet to be discovered by the Amie Street community) that you like, so you give it your stamp of approval. If its price then rises — proving that you were right about it “having legs,” as the saying goes — you earn free music credits.

“Amie Street has proven that community-driven pricing is an effective model for maximizing digital sales,” stated Bob Morelli, president of RED. “But … it’s more than just a new e-commerce model. It’s a new music destination that is social, dynamic and an engaging experience. It will be an important marketing platform for our labels and artists.”

His enthusiasm aside, Sony RED’s participation should not be construed as full major-label participation. The labels RED distributes are all independent — it’s just that independent labels tend to need help with distribution (delivering product to retail outlets and online services), and often turn to the majors’ distribution arms for that.

For this reason, some in the independent music community accuse the majors of misrepresenting how many songs they control when negotiating with digital music services, because distribution agreements with indie labels expire. (In other words, the majors don’t actually own music they allegedly claim to represent when negotiating with digital music services.)

That matter aside, this deal between Sony’s indie distribution arm and Amie Street:

  • involves no such misrepresentation
  • adds worthwhile music to Amie Street’s already impressive indie music catalog,
  • represents some progress in terms of the majors embracing new business models — especially ones that sell music at lower price points, where more fans might be more tempted to buy

We assume Sony will be keeping an eye on how RED’s music performs in the store, so this deal could also be a major-label audition for digital music at the reasonable price of 15 cents and up.

Posted by Ted • Wednesday, August 19, 2009 .