Business Matters is a daily column that offers insight, analysis and opinion on the day's news. Follow Billboard senior analyst Glenn Peoples on Twitter at twitter.com/billboardglenn .
-- Do higher prices equal slower sales? That's the warning to e-book publishers by Peter Kafka at MediaMemo. In a sense, Kafka is right. Sales have slowed down, and Billboard research has shown that higher track pricing will lead to fewer unit sales. But there are a few asterisks to place next to Kafka's statement. First, variable pricing at iTunes coincided with two huge movements: an economic recession and a natural slowing in digital growth rate. Warner Music Group's Edgar Bronfman Jr. said in the company's recent earnings call that Apple had decided to move to variable pricing in the summer of 2008, well before the financial meltdown and the May 2009 introduction of $1.29 tracks. That means the timing of variable pricing's launch was set before the economy soured. The impact of the recession is up for debate, but there's no doubt the days of double-digit digital growth would be coming to an end. Downloads simply weren't going to keep up their earlier pace. Second, the real message to e-book publishers is not that higher prices equals slower sales, it is that higher prices may lead to greater profits. Publishers and e-book service providers have conflicting goals. Publishers seek the best price for the sake of their profits. Apple and Amazon.com want lower prices to encourage greater unit sales and, thus, growth in more lucrative hardware sales. Third, publishers can accept a higher profit/fewer units trade-off better than record labels. With their increased reliance on ancillary revenue streams, record labels need to encourage consumers to listen to their artists. There will be non-recorded music payoffs down the road. Higher prices for music may lead to higher profit, but they also lead to fewer unit sales and fewer ears devoted to that particular release. A publisher that makes money on just a book doesn't have to live with that kind of trade off. (MediaMemo )
-- Just when people thought the album was over, out comes "14 Love Songs For The 14th," a 14-song collection from Rascal Flatts. But there's a catch. The album is digital only and will be available for two weeks. The occasion? Valentine's Day. Such a special occasion is a good opportunity to experiment with a short-lived bundle such as this. Perhaps label-induced artificial scarcity is just what is needed for bigger bundles such as this one. What works for one artist may not work for another artist. Luckily, the very nature of digital distribution allows for a wide variety of products with a wide variety of life spans. (Music Row )
-- Mobile music service Thumbplay will use Echo Nest technology to add new discovery tools and interactive playlist features. What kind of value will Echo Nest technology add to a service like Thumbplay? The company's CEO, Jim Lucchese, believes Echo Nest will add big value. "We're firm believers that user experience will drive willingness to pay for an experience on a catalog that large," he said. Last week, Thumbplay announced agreements with 20 additional content partners that pushed its catalog to over eight million tracks. (Digital Music News )
-- Melodeo announced immediate availability of 28 of its apps in the Android app store. The apps feature streaming playlists of 100 to 6,000 songs and are priced from $.99 to $1.99. Melodeo is the creator of popular music streaming app nuTsie. "Our cloud-based platform makes it possible to create these apps for many platforms and devices very quickly," said Melodeo CEO Jim Billmaier. "We're very well positioned to take advantage of the expanding smartphone market.
-- Country star Vince Gill has been upgraded to a full-time member of The Time Jumpers. Gill has been a part-time member of the country swing group that plays every Monday night at Nashville's Station Inn. (Tennessean )
-- The owner of Ear X-tacy, the well known independent record store in Louisville, Kentucky, has "concerns for the survival" of his store. John Timmons said he will discuss the future of the store in a press conference on Friday morning. A press release notes the store's current least expires in March. "It's everything - the lease is definitely a worry," said a store manager, "but it's combined with the economy and a bad (music) industry." Ear X-tacy is a member of the Coalition of Independent Music Stores. (Courier-Journal )
-- Suburban Noize Records and Sony Music's RED Distribution have completed an exclusive distribution agreement effective March 1. It is a U.S.-only deal and includes all methods of delivery.
-- The transcript of Tuesday's Warner Music Group FQ1 earnings call. (Seeking Alpha )