iTunes' 69-Cent Discount Songs Drive Chart Positions and Radio Plays -- For a Price
Since its introduction two months ago, the "Great 69¢ Songs" section of Apple's iTunes Store, the company's latest experiment with song discounts at that price and which can be found halfway down the Store's front page, has become one of label executives' most closely watched promotion vehicles.
Hit tracks typically sell for $1.29 on the iTunes Store, but labels are finding that promising songs can receive a boost -- at a cost -- after being featured within the section, helping to keep a song on the radio when labels fear momentum is waning, and when would-be hits are percolating below the top 40, 30, 20 on various charts.
Importantly, Nashville label executives say the discount section is "practically the only way to get a track on the front page, if your music is in another genre -- not pop or urban."
Overall, having a song on the slider “could help out the whole picture,” says Concord Records'' head of sales Mike Gillespie.
Shawn Mendes' “Treat You Better” is a good case study. The song went made available for purchase on sale June 3, debuting on the Hot 100 at No. 34 before falling back to No. 63 the following week. After several weeks spent slowly ascending the charts, eventually reaching No. 14. In what seemed to be an attempt to crack the Hot 100 top 10, "Treat You Better" was ultimately submitted and accepted into "Great 69¢ Songs" (where it stayed for three weeks), posting a 66 percent increase in sales in its first week at a discounted price, driving it to No. 12, and eventually No. 8.
Throughout, streams of the song held steady -- over 9 million a week, five weeks in a row -- but radio spins also rose, from 8,000 all-format plays the week of July 21, according to Nielsen Music, then 12,000... then 13,000, 15,000 and 16,000 in the three weeks that it was placed on "Great 69¢ Songs."
"I don’t know what the problem is yet, but I think one is coming,” one label executive tells Billboard, recalling expensive discounting strategies in years past.
One clear problem is the aforementioned "cost" of the section. A majority of songs featured in the slider lose money, one source says, telling Billboard the promotion can cost between $2,000 and $10,000 a week. If a record becomes a runaway hit in the week its featured, which can also be a costly revenue hit.
“We have been using pricing as a tactical way to drive songs up the chart for many years now, but this is more predictable, if you get placement in the visible portion of the slider,” says a label executive who didn’t want to be quoted by name. (Unsurprisingly, according to label executives, the first 16 visible-by-default songs of the 200-song section, is much more important.)
However, the strategy yields diminishing returns, driving sales for about two weeks (the typical length of time a song is featured). After that, even if it stays within the section, sales will begin to fall. When the price is raised back up to the default $1.29, there is a dramatic sales drop. Not shocking.
Some in the music business wonder if the overall decline of digital sales -- this year, track sales are down 25 percent -- could push the standard price for a digital song back down to $0.99. Asked about a possible price drop overall, label executives emphatically responded: “No.”