When iTunes Music went DRM-free and "hits" jumped from $0.99 to $1.29 stories soon followed that the higher price point was leading to slower sales... and now that iBooks and publishers aim to increase eBook sales from $9.99 to up to $14.99, MediaMemo is telling them to "beware!":
Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple’s (AAPL) iTunes decelerate since the price increase: Industrywide, year-over-year “digital track equivalent album unit growth” was at five percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.
If people have to spend more they'll buy less? And if they think the price is unreasonably high they'll buy less still? Shocked. Shocked are we!
The thing is this -- under the new 70/30 agency model, publishers can charge what they like. If nobody buys a new bestseller at $14.99 but they do at $12.99, publishers can set that price on iBooks and still get their 70%. They can go back to $9.99 if they want to. Same with music.
Way back when iTunes Store launched, Steve Jobs made it a point to say their competition wasn't physical media -- it was free pirated media. There's a price point where users will feel it's cheap enough they don't even want to bother with the steps involved in pirating eBooks or MP3s, they'll just click the Buy Now button and thank Apple for the convenience.
That's the real model.