March 24, 2004

The Long Dive Towards the Magic Number Begins

Pricewar in NapsterLand! That's what the salvo of: Wal-Mart starts selling 88-cent songs online means.

Retailing giant Wal-Mart Stores Inc. officially entered the increasingly crowded online music market Tuesday with a service that offers songs for 11 cents less each than competitors like Apple Computer Inc.

Wal-Mart's online division, which is based in Brisbane, has been testing its Music Downloads store since December, selling tunes for 88 cents each or $8.88 per album. Wal-Mart said the test has been successful enough to formally start the service, at, with an expanded selection of 300,000 songs and exclusive tracks from artists like Jessica Simpson, Black Eyed Peas and Tim McGraw.

It is only the beginning but I suspect something like Moore's Law is about to take hold as the online music industry races down the price curve to the magic number that will enable them to rebound into stunning levels of profitability.

That number? 25 cents a tune. No more and no less. At that level, everybody, and I mean everybody, will start to amass personal music collections that would sink the Bismark.

It's simple. Would you rather have 10,000 dollars or 100,000 quarters? Alas, for many studio execs, math is hard.

Posted by Vanderleun at March 24, 2004 1:59 PM | TrackBack
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