Pricing of music

Abstract

With the increasing number of media vehicles, listeners and artist how one gets music to the customer and extract the right value for it is a major concern in the music industry and among music labels. With the advent of the internet and the long tail, music is available at a minimum price and the variety is huge. What makes a listener listen to any particular from of music, develop a liking towards it and makes him.her purchase that music is of a prime concern. We start of the research by looking at the organization of popular music industry and how is music delivered to the audience from the time of the music conception and through path it flows. In this we look at the price break up of a CD and see that the bulk of the cost of major label CDs goes into advertising, marketing, overhead, distribution and artist royalties, which explains why major label CDs cost much more than independently released CDs. Next we try and look at some theories on what relates the price and the value that is provided by music. We narrowed down our scope to CD audio and further reduced our scope to Hindi Film music to understand in-depth the core values that attract a listener to buy a music CD. For this we conducted depth interviews of listeners who have bought the CD of Dhoom 2 and understood three divisions of listeners – cults, non-lovers and undecided group. Through our insights from depth interviews and administering a questionnaire to target customers we were able to create a Decision Making Framework. The Decision making framework would depict the process through which a music listener goes through in order to make a purchase. There were two major paths which were identified – Self Interest Path and the Recommendations Path. A certain factor called the External Catalyst was also identified which was more strong in the Hindi Film Music scenario. Using the insights from depth interviews and the Decision Making Framework a sales prediction model was developed, which took into consideration the factors which led to the purchase of a CD and which factors actually are useful in determining sales. But in the end the problem still remains in providing variety to the ever evolving customer where the interest span is becoming shorter and shorter. Nowadays companies are allowing for digital downloads by ensuring proper certification for playing. Another new method of involving customers and delivering more value for them is done by allowing customers to create their own custom made CDs, where they can select their favorite songs online and create their own compilation.