Subscription Service Pricing Under Scrutiny


The Journal has a slightly odd story about “most-favored nation” status and pricing. Maybe it just reads odd to me because I’ve dealt with MFNs for years in cable programming so I’m not surprised to see it at work in music. For purposes of this discussion, MFN — and please send me a better explanation if you have one — is a clause in a contract that usually means no one else can have a better deal than that content provider. For instance, if you agree to pay me 50 cents a song wholesale and then agree to pay someone else 51 cents a song, you have to up my price to 51 cents. On the other hand, if I don’t have an MFN, you could pay someone else $1 a song and I’d be stuck at 50 cents — until it’s time to renegotiate.
As longtime readers know, I’m very interested in variable pricing and how prices are set. I’ve spent a lot of time in the last few days looking at video pricing issues and will be writing more about it soon. In the interim, the clearest aspect of all of this is that NY state attorney general Eliot Spitzer sees a good opportunity here and he isn’t going away anytime soon.

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