Raising Houston Music Prices Good Business, Bad PR

Two words: dynamic pricing. Those could be magic words in the media business these days.

When you walk into Wal-Mart and see the DVD released last week, you’ll pay $28 for it. In two weeks, $21; in 3 months, $14. That’s just cashing in on demand - it’s the most common practice in the retail world.

But we don’t live in the DVD world any more, we now live in the digital distribution world, where prices can be altered as quickly and easily as updating a twitter account. That’s dynamic pricing. (See local gas station for another common example).

You won’t see a Wal-Mart employee running down the music aisle with a price gun after hearing of a singer’s untimely death, but I bet that if they knew it would bring in an extra $2-million, they would send someone sprinting.

Hard to blame Sony for dynamic music price

So I find it hard to blame the reported mid-level Sony executive who raised the price of Whitney Houston’s digital music downloads in the wake of her death this week.

Suddenly, the singer’s catalog wasn’t just sitting in the long-tail, slowly accumulating downloads - it was tearing up the charts! And when it is guaranteed that something is going to sell hundreds of thousands of copies, a smart businessperson wouldn’t sit on their hands.

We saw this same charting phenomenon when Michael Jackson died. In a blast of unbridled nostalgia, the world flocked to the internet to download the singer’s classic songs. Imagine how much the record label would have benefitted if they happened to raise the price of each album by just three dollars the week before.

Many people consider raising the price of Houston’s albums shortly after her death to be in poor taste. While I imagine that many music executives consider that taste to be the magnificent flavour of cash, it appears that the public backlash will prevent record companies from similarly raising prices when Bob Dylan or Paul McCartney kick the bucket.

Properly cashing in on nostalgia

But is there a more tasteful way to gain that bonus revenue in the wake of popular musician’s death? Again, look no further than iTunes.

iTunes creates custom playlists featuring common hits and ‘deep cuts’ for many artists. Imagine an authorized playlist that a musician might give his or her blessing before their death.

The authorized playlist could feature rarities and the collection could be priced and marketed as the definitive memorial album for the musician. Don’t think it hasn’t been discussed (or executed) already.

Would this be accepted by bleeding hearts? I’m not sure. But I bet that music executives are considering this model in the wake of Houston’s death and the pattern that has now been established.

Let’s not blame music executives for taking advantage of pricing agility to maximize revenue. If they had the ability, everyone else would.