Tuesday, September 30, 2008

A new business model for artists

A new business model:

So I am taking this video course in economics for fun. And I’m so repulsed by the amorality of economics, so I’ve been trying to envision a healthy business model. And I think I’m on to something here…

-If you have something to sell, set a price for it. Say you have a CD you want to sell, and you think that it’s worth $10,000. And you go around and shop it from place to place and some company somewhere will give you $30,000. Sold.

-But, what happened to the bonus $20,000? Was that profit? Or excess?

-I know this is hard to do if nobody wants your stuff, but imagine this instance: you set up a price based on the amount of honest, hard work that you put into it. Say 200 hours on the production of the CD. How much was your time worth? $20/hour? More? Let’s say $30/hour. That’s $6,000. Think about that. That’s 600 CDs. If you do it itunes style. Actually, itunes only gives the artist something like $.08 per CD sold. For itunes, that’s like 75000 CDs. But I digress…

-Set up a price ceiling. Say you want to make $10,000. But, you want to sell the CDs for $10 a piece. So you market the thing, get some samples out there, maybe a single or two, and generate preorder excitement. Then you take the preorders, if you get less than a thousand orders, you take a little less than you wanted, and you start on the next one. If you get more, though, the extra could go to a non-profit, a charity, or back to the consumers by rewarding them by using percentages to charge less in relation to that price ceiling. If 2000 people wanted the CDs, they would get them for $5 a piece. Two benefits:

1-People will help market it for you, by trying to get more people to buy it, thereby decreasing its price.

2-You could offer the people incentive for paying $10 no matter what, with the knowledge that the extra money will go to a certain NPO or something like that.

-I have no idea why I thought it was that pressing for me to share that, but there it is.


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