Amie Street, Rhode Island-based music site, has reinvented the online music business model by allowing prices for pieces of music to fluctuate based on artist interest and demand. The songs start out free and rise in price all the way to 98 cents. Music can be valued by the market just like stocks on Wall Street and prices fluctuate in the same fashion. Amie Street has also built in a social network hook allowing users to become friends and recommend music to one another.
Why am I talking about Amie Street? Amie Street could be disruptive to the music industry as they let the market put a value on the price of music and not visa versa. Power to the people - it sounds like a web 2.0 approach to music if you ask me. Eric Olson wrote an article about this music industry disruption where he said:
"Music labels may fear this type of pricing model because it throws some uncertainty into the mix. Specifically, it hampers their ability to determine how much they will make from a certain recording. Enter market pricing. Now labels don’t know what their product will sell for let alone if the artists will even be well received."
In an era of American Idol and web 2.0 sites like YouTube, AIM Pages and MySpace artists can distribute music independently circumventing the major music labels. Unless there is a huge push to make all online music "free" (which is probably unlikely) Amie Street is positioned perfectly to become the business model for online music.
