Radiohead Music At Your Own Price (A) Case Solution
The problem in the case was to determine which platform is beneficial for Radio-head to release its new album called “In rainbow”. Radio-head had choices to release its album via iTunes or self-release on their website. Their ultimate goal was to maximize revenue and volumes of the album. In order generate high sales, Radio-head should opt the iTunes platform to release it new album.
After analyzing the case, it is concluded that iTunes platform will generate higher revenues from estimated total sales for Radio-head’s album than self-release via their website. It is due to the uncertainty involved in it. The iTunes music store, which was supplemented by Apple’s iPod gadget ( a market share of 42% for digital music devices used by adult Internet users), offered music that could only be played on iPods and/or through iTunes software, and accounted for all legal online music downloads of 70 percent.In 2016, there were 20.8 million accounts were using iTunes for downloading their favorite’s music. (Dalrymple, 2006)
The revenue from estimates total sales is more than $20 million which generated by multiplying price of Artists share from iTunes with number of sales volume on iTunes. The sales volume were taken from percentage given in the case of all legal online music download and the number of accounts using iTunes using for music downloading.
On contrast of iTunes, another platform the self-release via their website will generate revenue of greater than $19 million and less than 20 million. It is generated by multiplying volume of sales from self-release via website,which calculated by multiplying percentage of consumers buying album on the average price with total estimated number of visitors on their website, with sum of average price chosen by consumers at pay what you want and a service charge.
By analysis revenue of iTunes from its active accounts and revenue of self-release via their website from its number of visitors downloading with average price. In conclusion, it proved that iTunes is generating more revenues by increasing number of iPhone users opting this software for song downloads.
The iTunes sale volumes were taken from percentage given in the case of all legal online music download and the number of accounts using iTunes using for music downloading shown below:
70% * 20,800,000 (20.8 million) = 14,560,000 sales volume
When the price of Artists share which is $1.4 multiplied by volume of sales calculated above will generate more than 20 million of revenue from iTunes platform show below:
$1.4 * 14,560,000 = $20,384,000 sales revenue
The volume of sales from self-release via their website, which calculated by multiplying percentage of consumers buying album on the average price that is 38% (RESTON, 2007) with total estimated number of visitors on their website (8.5 million)shown below.
38% * 8,500,000 = 3,230,000 sales volume
The average price of consumer paying for album from their website is calculated from the average of minimum and maximum prices give in the case that is range of $0.00-$9.99 shown below:………………………….
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