What a surprise: Higher prices dampens sales

In a shocking discovery, music publishers have found that the law of supply and demand works. Apple loosened up pricing rules for music on the iTunes Store last year. Record companies immediately raised prices. Buyers immediately bought less music. The record companies are shocked, shocked that buyers don't want to pay more. What could have gone wrong? Higher prices signal less supply, and in turn, demand tends to drop. Record companies might want to send a few of their high paid execs back to high school to retake an economics class.

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Comments

A lot of big companies need to focus on the product and the actual people who make the products, and not be as focused on the CEO bonus each year.

Any average person on the street could tell the record companies this much. IT's why FYE and Border's are going out of business...they overcharge big time. Even with their store closing sales of 40% or more, the prices are comparable to Wal-Mart or Best Buy. I won't buy anything at retail price, I buy it used for a fraction of the price. I will not pay more than $10 for any DVD or CD, ever. If that means I don't see a movie or hear a CD for sevewral months, then so be it. I'm a consumer product company's worst nightmare: I remember unit prices like a computer, I always buy on real discounts instead of 'marked' discounts, and I buy used for a lot of things to avoid the retail mark-up.

Nice article, it really puts things into perspective.