Why $.99 Will Bring in More Revenue than $1.99

You may use this content (better still, argue with me!), but please cite my ideas as © 2005, Dr. Bruce Klopfenstein. Best viewed in Firefox.

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My glorious students at the University of Georgia are finishing their final projects, most of them are iTV simulations. Lucky me gets to learn from the students what's hot and off the web-beaten trail. While tooling around today, I stumbled across a webcast by Steve Jobs touting the new video iPod. The audience sounded like Apple enthusiasts, but I noticed in watching the webcast how loud the applause was for downloading a song for $.99 and the complete lack of applause for downloading a music video for $1.99. Once again, reverting to an old submission to the Journal of Anectdotal Evidence, I have believed that the economic gains of lowering the price of pay-per-view movies would have meant far more customers using the service than ever have. We will be able to test that theory as IPTV comes along and may well offer movies for $1.99 or less. There is something about $.99 that makes it sound almost free. If I were selling songs, I'd rather sell 1,000,000 copies of one song at $.99 than 200,000 songs at $1.99. In addition, songs at $.99 probably translate into fewer attempts at piracy than would be the case for the song priced at $1.99. Of course, I would also be willing to watch a 10 second ad, once, in return for a "free" song.

What do you think?

Update from 14 December 2005: I discovered a poll publised in Multichannel News that showed the following:

Will other cable operators and programmers jump on the 99-cent VOD bandwagon?
84% of respondents said yes, 16% said no. Gee, and I didn't even get my crack at telling them to do this.