[Post authored by FMC Policy Intern Cody Duncan]

Away from the aisles of brick and mortar retailers, independent game sellers have been experimenting with new marketing models. Some of their sales strategies may even prove valuable for musicians and record labels. Product bundling — along with strategic timing, live and variable pricing and charitable giving — are providing a range of incentives for potential customers to support artists and developers.

A Brief History of Gaming Bundles

If you are a PC gamer, a mere mention of a Steam summer or Christmas sale will cause you to curse, likely while reaching for your wallet. About twice a year, gaming platform Steam provides major discounts to titles, and as part of the action, they bundle packs of games, again offered at major discounts which expire after a short time. With these discounts come significant jumps in sales which often extend well beyond the end of the promotion.

Taking a cue from the success of Steam’s bundle sales for independent games, independent game developers David and Jeffrey Rosen of Wolfire Games tried a similar approach, selling games on a pay-what-you-want model borrowed. In addition, Wolfire adopted a new and innovative pricing system. Think Radiohead’s In Rainbows, with a dash of gamification and some charitable giving. Basically it works like this: Name your price. If you pay more than the average (which is constantly visible and updating), you receive bonus material, typically another game or two. These schemes seemto mitigate some of the problems artists have faced under a raw pay-what-you-want model, turning a race to the bottom into a race to the top (or at least an average). A portion of each sale goes to one or two charities, and in a move that capitalizes on the gamer demographic, there’s a kind of high score board where those who paid the most are placed on a list of contributors.

It wasn’t long before these techniques incorporated music. Next came the Indie Game Music Bundle and the Humble Music Bundle — a bundle of high-quality downloads (with a mean threshold bonus), featuring twelve remixed tracks by FMC pals OK Go. (Later came the Humble eBook Bundle, a selection of eBooks.)

The approach has since been employed by independent and big developers alike, crypto-anarchists, Seattle Musicians, and independent web radio stations.  Each has tweaked the model to meet their ends, and each has met their own varying measures of success.

This variable-price fire sale bundling strategy provides a range of options for sellers of media, particularly intangible goods. When sold separately, some of these items may not get much traction, but taken together, they can add up to real incentive for fans.

Pricing and Urgency

When well-executed, the sense of urgency created by a flashing sale sign can have a profound impact on a buyer’s psychology, particularly when the price is literally as low as he wants it to be. By taking away preventative hurdles like cost, and imposing the pressing deadline, the impediment of “if not now, when?” is removed from the equations, until now is the only time that makes any sense. A buyer is left only with the costs in time of pulling out their wallet. And the numbers show that once that wallet is open, people tend to pay generously.

This generosity is, of course, made all the more likely by the “beat-the-average” incentive. After all, if the purse is out for the penny, it as well pull a bill. Lower prices may incentivize the customer past the transaction hurdle, while the allure of bonuses nudges them past the average. From there, the charitable cut may drive them even further. Each step of the way, the seller is giving the buyer a reason to convince themselves to pay more. It’s a brilliant scheme, particularly when one of the greatest hurdles in the digital marketplace is to get the customer to pay anything at all.

But What Does it all Mean?

The music marketplace is flooded with amazing artists, but there is something of a curatorial vacuum. The internet has thus far filled this void with blogs, recommendations from friends, and, increasingly, algorithms. However, unlike the shopkeepers and radio DJs of yesteryear, even the most thoughtful curatorial services can be difficult to monetize. Online bundles, with their dynamic pricing systems and lazer-sharp demographic focus, are proving one way to serve creators and fans.

For a buyer, the bundle offers a number of benefits. First, you get the media you want for a small amount of money. Beyond that, bundles play fill an important curatorial function. For many, the fact that a game or a song was good enough to make the Humble Bundle is in itself a reason to check it out. The success of each bundle is related to the quality of the last, coupled with whatever work you may really be interested in. As a first-time buyer, you might not even want four of the six albums, but that might change if you get all of them for the price of one, and had to do it now.

Much of this benefit is related to how the bundle is treated. If it’s like a bargain bin, or a kind of “these are the five random bands I could get to sign a temporary non-exclusive licensing deal so that I could sell their downloads on my blog and get a cut of the profits,” venture, the results might not be so hot. But these gaming bundles are taking a different approach — one that increases fan investment and therefore, return customers.

For up-and-coming or unsigned musicians, these platforms can make a big difference. First, your sales may go up. It’s true that your cut will be smaller, but many of these sales likely would not have occurred in the first place. And, since we’re talking downloads, the overhead is extremely low. It’s certainly possible that a fan might have heard your album otherwise, and bought it at a conventional price. But that’s basic opportunity cost, and things look different for different artists at different stages of their careers.

Second, there is the exposure from a trusted curator. Exposure isn’t everything, but it certainly can make a difference. An association with a quality bundle may, for a certain audience, advance your reputation as an artist. There is, of course, the possibility that a fan might spot your record on an expired sale, and decline to pay full price somewhere else. But they may also think, “too bad I missed that sale” and come back next time.

Third, bundles can be a powerful way to sell old material. While the benefits of bundling are more apparently applicable to smaller artists, more well-known artists may utilize this model as a way of extending the life of prior releases. You may not want to drop your new album at a ninety percent discount, but if you have a solid back catalog, and maybe some bonus materials like artwork or video that you can toss into the deal, it may give a bump to otherwise inactive products.

Fourth, do it for the children! Coupling your product with charitable giving helps musicians and charities. As an artist you gain karma, credibility, and a cut of a customer’s good will. How much of a cut you take is between you and the bundler, or maybe you and the customer.

TL;DR

Artists are diverse; sales models are diverse. The video game industry is booming, and at every level, filled with brilliant innovators who face many of the same challenges of the modern music industry. Artists and labels, might want to take note, and play nice.