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As more digital music services outside of Apple are converting their libraries of tunes to DRM-free software, record labels are thinking that variable pricing points will be another way to spark more music sales online. The drop in CD revenue has yet to be made up for by digital sales, but changing prices on individual tracks and albums could be part of the solution to do so. A survey was done that showed of the people who do pay for music, 33% downloaded between 10-50 songs in the past 6 months, while 26% downloaded less than 10. The idea with variable pricing is that raising prices will make more money off the 10-50 song crowd, while lowering other prices will encourage the less than 10 song group to buy more music.
Digital service PassAlong, which has its own digital music store, completed a study using the Digonex variable pricing system conducted with Canadian label Nettwerk. Once per week for 16 weeks, the service altered the price on 2,000 tracks participating in the test (singles were 99, 66, and 33 cents while albums were priced more granularly). According to their CEO, prices fell on albums just over a dollar, but revenue from tracks in the program increased an average of 122%, with some up 500%. A key thing was albums were sold they customers would usually buy only two or three tracks from since they were priced lower. The trial did not include singles for sale over 99 cents, so it is unknown whether the elasticity of the system can support more expensive individual tracks. Along with DRM-free music, the industry is hoping this will give competitors more power and the ability to sell higher volumes of music while making a greater profit.