In the previous example, consumers were given the choice between: a) buying a physical CD, or b) buying the MP3 version of the same album, and the MP3 version was priced at a premium in some cases, and at a discount for other albums. Consequently, I doubt digital download music or videos fluctuate in price the same way physical media does. Tom Davis: I would guess that the copyright holders set the price for digital media, but Amazon purchases CDs from the distributor and gets to decide the price (including whether they will take a loss to free up warehouse space).
Plus, pricing on physical products like CDs can be affected by inventory issues (clearance sales due to overstocking). Different people can own the rights to different formats and have different views about pricing.
I asked the question, “Why do the MP3 versions of an album sometimes sell for a 50% discount and sometimes sell for a 50% premium compared to the CD version of the same album?” Some of the commenters provided some plausible explanations to that pricing puzzle:ĭan Hill: A lot of it has to do with the intellectual property rights.
Last fall, I had a post about a “pricing puzzle” in regards to the way Amazon prices its CDs and MP3 music.
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