The Price is Wrong?

This Wired article (via Matt) discusses why Apple’s 99 cents/song might still be too high.

When considering the price, it’s important to move beyond price-per-song, because I don’t think most people think in those terms.  Instead, people are going to think in terms of price-per-mass quantity of songs. Though I’m not sure precisely how big that quantity is, I do think the distinction is important.

Let me try to explain it this way: Let’s say that a person is willing to spend 50 dollars per year on music and he wants to acquire 100 songs per year. Let’s also assume that the person wants to use one method of acquiring music; that is, he doesn’t want to switch back and forth between the record store, iTunes, and KaZaA. So, given Apple’s service, this particular consumer would need to spend 100 dollars to acquire all of his music through iTunes.  This is above his threshold.  Thus, rather than even spending 50 dollars at iTunes, he spends zero.

It’s worth interrogating my assumption that people won’t use multiple services, but I really do think it holds true in most cases.  If people habitually download from KaZaA, they will have little reason to suddenly purchase two or three songs from Apple. They’ll just use their default way of purchasing music, because it’s convenient. To get past that, I suppose the person would really have to think it through, consider his budget in a conscious way.

The question then arises: will any current users switch over from KaZaA?  Wouldn’t that involve a conscious choice to change their behavior?  To some extent, this will be true. But, because Apple’s gotten so much buzz, I think they will be able to win people over.  They’ve attracted a lot of people’s attention really quickly – iTunes is THE New, Exciting, Revolutionary, Killer App, or least that’s how it’s being spun.  As I noted before, the key is for Apple to keep this going – to get the system onto Windows, to grow the catalog, to market the hell out of it.