Best pricing model for selling MP3s, ever?

When it comes to downloading legal music from the internet two of the biggest names in town - iTunes and eMusic - have built up their business on back of two different pricing regimes. iTunes charge consumers by the download - 99 cents for each DRM-protected track (or EUR 1.29 for a track that is DRM free, but of EMI artists only). On the other hand eMusic have a subscription model where every month you can pay from EUR 12.99 (for 20 downloads, no DRM protection) up to Euro 20.99 (for 75 downloads).

iTunes and eMusic however can expect some potentially considerable competition when Amazon launches their MP3 store later this year but the most disruptive aspect of their launch could be its pricing model. While there has been no announcement yet from Amazon on how they will price their downloads, a strong hint emerged this week when it was revealed that Amazon has invested in a small US based start up company who have a very innovative new pricing model for MP3s.

Amie Street, the small online music retailer who secured the investment from Amazon, are already out there offering a unique pricing structure - every song sold by Amie Street is not just free of any DRM shackles but it is also - initially - totally free to download. But as more people start to download the song the price rises, up to a maximum of 98 US cents (i.e. 31 cents less than the price of a DRM-free track on iTunes).

Will this be the pricing structure of Amazon's future MP3 store? If so - and it is successful - could we see the eMusics and iTunes of the world adopt it? It all remains to be seen but the whole digital download industry - despite the ubiquity of iPods and other portable MP3 players - is really only now getting off the ground. And the major labels are playing catch-up.

Between Amazon's pending (DRM-free) arrival in the market place and Steve Jobs' plea to the music industry earlier this year that they remove copy protection from MP3s (which to date AFAIK has only been embraced, among the  majors, by EMI), I think it is a matter of time before restrictions placed on legal downloads become a thing of the past. Sure, as Prince is showing the world, you can give away your music to your fans - without copy restrictions nor charge - and still make a financial killing (once off payment of £250,000 from the Daily Mail, and God knows how many millions from his 21 day stint in London's O2 arena).

I know it's all very utopian but the day may still come when we will have an even simpler version of the Amie Street pricing model: music available for free, forever.

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