mortslim;425463 Wrote: > Napster's costs are "variable", not "fixed". The more music Napster > plays, the more it has to pay to the royalty collectors.Napster's royalty > costs may be variable with the number of tunes played, but: a) the company has many operating costs associated with it that are not directly variable; and b) the variability of royalties is based on the number of songs played, NOT the number of subscribers. Newer subscribers might be less frequent users than the existing subscribers, so even if total operating costs do go up, revenues and operating margin could both improve as well.
This move by Napster/Best Buy is a classic test of price elasticity. The downside risk is not because of increased royalty payments, it's that the number of new subscribers might not be enough to make up for the lower subscription fees. -- TiredLegs "These go to eleven." - Nigel Tufnel ------------------------------------------------------------------------ TiredLegs's Profile: http://forums.slimdevices.com/member.php?userid=6201 View this thread: http://forums.slimdevices.com/showthread.php?t=63479 _______________________________________________ discuss mailing list [email protected] http://lists.slimdevices.com/mailman/listinfo/discuss
