The right price for digital music.

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Dec. 5 2005 5:46 PM

The Right Price for Digital Music

Why 99 cents per song is too much, and too little.

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The big wild card here is the impact of illegal file sharing. David Blackburn, a doctoral student at Harvard, has argued that peer-to-peer systems increase demand for less popular recordings but dampen sales of hits. If that's the case, charging extra for top sellers might just push legal downloaders back into the outlaw world of peer-to-peer file trading. If that happens, perhaps the record companies will start offering free digital downloads of top-100 hits (with ads embedded inside, of course), while charging whatever the market will bear for the rest. A Digital Music Exchange may not be a perfect solution, but who would you prefer to set the price of music: consumers or record executives?

Adam L. Penenberg is an assistant professor at New York University and assistant director of the business and economic reporting program in the school's department of journalism. You can email him at penenberg@yahoo.com.

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