Pricing In The Digital Age

Via Bob Lefsetz, I went to Seth’s blog this morning and read his post about pricing in the digital age. Seth argues that you need to drop prices agressively in the digital age in order to get scale. He suggests that Apple and the movie studios charge 50 cents for a rental instead of the $3 per rental that Blockbuster gets.

Seth’s right and I suggest you go read his post.

But to me a low price is only half the equation. Convenience is the other half. Bit torrent is still damn hard. You have to find the torrent, then download it, then open it in a download client. Then hope the file you download isn’t bogus, will play in VLC or Quicktime, and that it’s of decent viewing quality. It really shouldn’t be that hard to beat that experience.

I suggested on Saturday that texting in purchases is a very convenient way to buy stuff online and specifically suggested that iTunes offer it for their movie rental business. That’s another way to offer convenience.

How about lifting the 5 authorized computer rule? We have nine Macs in our house. Each family member has a laptop (that’s five) and we have a shared laptop in our kitchen. And we have Mac Minis in each of our three media cabinets. It would be nice if we could download a movie or TV show from iTunes onto any one of those machines and watch it on any other one. The five authorized computer rule makes that impossible and as a result we have many inconvenient moments with iTunes.

So take advantage of the economics of online distribution and make your products less expensive (for content it can be dramatically less expensive) but make it convenient too.

That’s the winning formula.

#VC & Technology