This has long been a discussion among my peers and the industry in general. $0.99? $0.00? $9.99/album? $1.99/album? All of these prices are being tried now in various guises (OK Computer was $1.99 this week at Amazon.com’s MP3 store).

There are very smart people conjecturing on the various benefits of each price point. Terry McBride in a recent must-read paper for UK Media studies group MusicTank posited that $0.25 was a “sweet spot” – a position he described as a price that would draw just enough of current P2P users to legal, paid-for services to increase the volume of paid-for downloads enough to significantly increase incoming revenue for artists and labels.

Then came this piece in the LA Times – it comes on the back of Universal pulling the album of their artist Estelle off of iTunes in an attempt to create scarcity. Estelle is one of those artists who’s single is more important than the album – and just like the old days – Universal wants customers to buy the whole album, not just the single. As an alternative to pulling the album, The Times piece suggests that labels should raise the price of the single to $1.99.

So which is it?

What I have to agree with is that the inflexibility that iTunes holds on price (i.e. ONLY $0.99/track) is damaging to all parties here – customers, artists and labels. The closest thing to real price elasticity is AmazonMP3 allowing this kind of radical price experimentation (see the Radiohead classic album for $1.99 above), and so might be the closest thing to a real test of Terry McBride’s pricing suggestions.

Personally, I have to lean toward Terry’s idea of the $0.25 track – unless you’re a major label act like Estelle, you’ve no need to try and play the artificial scarcity game, even with the particular challenges that offering cheap, or even free, music presents.

So what do you think? What’s a reasonable per-track price in your world?

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