Popcuts ("Buy a song. Get Paid everytime it sells again.") launched last week with a brilliant new pricing model. It rewards early buyers of music with profit from all (!) further purchases of that music and not only (as usually offered) from the purchases generated from their own recommendations.
What's cool about the model is that Popcuts (as opposed to Amie Street and others) can work with a uniform song price of 99 cents and still effectively generate a purchase incentive.
Early supporters profit proportionally better from the revenue of future hit songs and can therefore recoup their stake after only a small number of further sales.
Techcrunch describes the process as follows:
"When an artist signs on to the store, they allocate a certain portion of the revenue generated by their songs to go back to their fans. This money is then distributed according to how early each user purchased a song (the earlier you buy, the more you make).
For example, the band My First Earthquake has decided to pay out 30% of its revenues to its fans. The earliest adopters (say, the first dozen people to buy the song) will break even after the song has been purchased by around 25 other people.
Fans buying the song later on will still earn credit, but it will be earned at a much slower rate (the site will tell you how quickly you’ll be earning credit before you buy a song)."
The artists can decide for themselves what percentage of revenue goes back to the fans.
Popcuts comes from the startup incubator Y Combinator (team profile here).
Although the pricing model is remarkable - and the founders have full right to be proud of the idea - the site might be more successful if the fun of discovery and pure enjoyment of the music would take the front stage instead of the commercial elements.
At the moment, the monetary aspect of the Popcuts site is a tad overwhelming. However the thrill of the rewards alone could indeed be enough encouragement for users to engage themselves as trendspotters. Questionable is whether or not the trendspotters really need to be reminded at each and every turn about opportunities to cash-in.
Nevertheless, one of the most intelligent price models to appear for a long time.
If you also see how Wine.Woot! most recently started rewarding early wine buyers with free wine samples, it’s worthwhile to investigate if such a model can be adapted to other conventional e-commerce business models.
Originally posted in German by Jochen Krisch, translated by Jason Soo.
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