“Largely unnoticed in the [Microsoft 30GB Zune for US$249.99, 99-cents more than a 30GB Apple iPod] pricing announcement last week was this little tidbit about how consumers might pay for Zune music. CNET had a pretty decent description in their article, where they accurately noted that Microsoft’s real play is to get people to buy subscriptions for $14.99 a month. But if pressed, they’ll generously allow people to buy individual songs,” Carl Howe writes for Blackfriars’ Marketing. “But you can forget one-click buying; Microsoft has a cuter idea:”
There will also be the option of purchasing individual songs through a system called Microsoft Points. The new Microsoft cash system will work by adding money to an account, as with a prepaid phone card. Points will then be deducted from the account with each purchase. A single song will cost 79 points, “the equivalent of 99 cents,” according to Microsoft spokeswoman Kyrsa Dixon.
The point system is already used in the Xbox Live Marketplace, and Microsoft plans to host other online stores where Microsoft points can be redeemed, according to Katy Gentes, product marketing manager for Zune. In the United States, points are available in denominations of $5 for 400 points, $15 for 1,200, $25 for 2,000 and $50 for 4,000. That makes $1 worth about 80 points.
Howe writes, “Now from a marketing point of view, there are two marketing tricks going on here. First, is the concept of not having 100 points equal a dollar. That would be too simple and easy to understand. Instead, Microsoft sets the song price to 79 points, which most people will perceive as being inexpensive because it is less than 99. Yet, if you do the math, it’s actually slightly more than $0.99. Cute, very cute.”
Howe writes, “The second marketing trick is the use of a new form of currency; yes, Microsoft money has finally arrived, and it has all the charm of an end user licensing agreement — and just as many tricky parts. Note the denominations offered above and think about this common transaction: buying your average, garden-variety album for $9.99. You’ll need probably 799 points to buy that. But notice that there’s no 800 point denomination. Microsoft is betting that most consumers won’t buy two 400 point packs, but will instead opt for purchasing 1,200 points for $15, and will leave the extra 400 points on account with Microsoft. So consumers end up either 1) doing extra work to pay exactly the right amount (i.e., going to the store, purchasing two 400 point packs, returning to the music purchase and then buying their album), or 2) provide an interest free loan to a company that has $40 billion in the bank. Cute, too cute by half.”
Howe writes, “If the company spent half as much effort investing in, say, making a truly elegant hardware device (instead of just re-badging someone else’s) and making the user experience simple and hassle-free with one-click credit card payment (it worked for Amazon, didn’t it?), they’d probably make more money in the end than pinching pennies with tricky pricing and proprietary money schemes.”
Full article here.
MacDailyNews Take: This Zune thing is so bad, and keeps getting worse, it’s almost as if Microsoft wants it to fail. Is there any benefit at all to Microsoft if Zune fails? Some tax benefit or something? Or are they just really that incompetent? The world “chose” Microsoft’s Windows because they didn’t know any better, they thought a computer was a computer, people that had no idea what they were talking about told all their friends to buy a Wintel PC, and people wanted a computer for as cheap as possible. Windows is a mistake that snowballed. We’ll be correcting that mistake for a long, long time.
But, people are more technically savvy today. Note that iPod dominates and it isn’t the least expensive, it just works the best and people know it. Ditto for the Mac slowly beginning to take market share from Windows again. People aren’t as easily fooled with tech nowadays. Either Microsoft wants Zune to flop for some reason or they actually believe their own press clippings and think they can fool the world again, which just isn’t going to happen.
Related articles:
Why Microsoft’s Zune won’t kill Apple’s iPod – October 03, 2006
10 Apple iPod vs. Microsoft Zune myths – October 02, 2006
Analyst: Zune could lead to ‘civil war’ between Microsoft and Windows Media partners – September 29, 2006
Thurrott on Microsoft’s Zune: ‘The makings of a disaster, what the heck are these people thinking?’ – September 29, 2006
Analyst: Microsoft Zune’s as good as dead on arrival – September 28, 2006
Microsoft sets 30GB Zune price at $249.99 – September 28, 2006
How Microsoft’s Zune can kill Apple’s iPod – September 21, 2006
Microsoft’s Zune insanity – September 21, 2006
The Microsoft Zune 1.0 dud – September 20, 2006
Microsoft’s underwhelming Zune a ‘viral DRM’ device – September 18, 2006
SanDisk teams with RealNetworks against new common foe: Microsoft Zune – September 18, 2006
Creative does Apple’s dirty work by immediately attacking Microsoft’s Zune – September 17, 2006
Motley Fool’s Jayson: Microsoft’s ‘just plain ugly’ Zune a meager offering, not an iPod killer – September 15, 2006
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Crave at CNET: ‘Microsoft Zune, all the excitement that brown can bring’ – September 15, 2006
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PC Magazine review: iTunes 7 ‘Apple’s best effort yet’ (4 stars out of 5) – September 15, 2006
CNET Editor’s Pick: Apple’s new 2G iPod nano – ‘sure to be top choice among wide range of users’ – September 14, 2006
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Actually quite brilliant from a marketing standpoint.
And most people will do what Microsoft says and will believe that 79 points is less than 99 cents.
Just wait for the Creative vs Microsoft, Zen vs Zune trademark infringement suit to decimate the Zen. 43 days til filing and counting…
779 points for an album sounds expesive to me.
There probably isn’t an easy way to redeem your points for cash either. Because of that, MSFT can articially overstate music sales because they’ve received payment, just haven’t delivered as yet. MSFT used to do something similar with sales of Windows and Office. They would sometimes show the revenue when the order was taken, although not shipped. They would bounce back and forth in their practice of accounting for revenue, that resulted in flattening wild swings in earnings, showing steady growth from quarter to quarter.
iZune this much
My favorite part is where they explain$5 for 400 points, $15 for 1,200, $25 for 2,000… as though there was some sort of discount as you got higher. Why not just say that it’s 5 bucks for 400 points and let those 3 guys that decide to buy in to the program do the math to determine that they could get 2k points for $25?!?!?!
And as for subscriptions, I can listen to my Sirius satellite radio in my car (I can also listen to my iPod there) and on my computer for $2/month less than what Microsoft is offering (without the news Howard Stern, and NFL), and thanks to Audio Hijack I can save any of the songs I hear DRM-free.
micro$oft is as micro$oft does, takes something that should be simple and makes it far too complicated by far…honestly whats the point? *de dum tiss*
This company has no respect for its users. They’re in it entirely to line their pockets and not really contribute anything. They stink.
I love M$. They have great customer service.
BURN BURN!!!
Wow. I’m completely shocked that Microsoft would stoop to such a sneaky, underhanded marketing ploy. Absolutely SHOCKED!
/sarcasm
Microsoft is a massive train wreck, happening over 4 years…
Microsoft is banking on getting users who like subscriptions, and then those users will also purchase songs, thus spending more than iTunes users. Plus, no one will understand the points per dollar pricing structure, and will spend more money, some of which will never get used due to the pricing schemes (yes, scheme), and thus MS will bank a lot of moolah.
With a point system Microsoft benefits several ways… plenty of people will confuse points with cents, thinking they’re paying 79 cents for a song, instead of 99 cents.
And later, it will be much easier for Microsoft to do the music industry’s bidding and raise the price to 89 points and then 99 points for a song. People won’t realise they’re paying closer to $1.25 per song.
points are to use its xbox hegemony. You can use the same points you bought on xbox live. That way you have 360 owners buying music on their console and transferring it to their Zune… apple doesn’t have ANYTHING like this.
Magic word: own.
You have to have a laugh at this post – Microsoft the land of free thinkers?!*?
“Zune Superior Portable Audio Player for free thinkers
Reader post by: Maxwell Studly
Posted on: September 28, 2006, 11:23 AM PDT
Story: Zune details unzipped
Zune is hardly an iPod knockoff. By all accounts is superior to the iPod in every way imaginable. Not that it’s hard to make a “better” mp3 player than the iPod. Creative, iriver, Samsung, and Sandisk (among others) have been making better mp3 players for years now.
The iPod is like a Brittney Spears album. Even though it’s absolute garbage and even though there are countless superior alternatives out there, mindless lemmings will still buy it. It’s the same kind of zombie that blows their money on Bose equipment and Monster cables…that’s the typical ipod advocate.
Down with mindless zombies. Long live free-thinkers (future Zune owners)”
These guys who champion Microsoft at any price are hilarious.
Man, I was hoping the songs would go for 78 points. 79 points is just TOO much.
Seriously, did someone forget to tell MS that we have this new-fangled thing now called the MONETARY SYSTEM. I mean, I guess they could have insisted that U.S. users pay up with Euros and Europeans use rupees and Chinese use Swiss francs. That would have been easier to grasp then this system. Reminds me of S&H greenstamps, collect 30,000 greenstamps and get a free bottle of wiper fluid or somesuch.
100 cents = 80 points
98.75 cents = 79 points
Slightly less that 99 cents.
Typical MS, shunning standards in an attempt to own everything themselves. They refuse to even use the same currency! How much do you want to bet that someday they try to make Microsoft Points a standard world currency? Come on, who’ll bet me 400 MS points? : )
Will they access Second Life currency?
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Why is that Micro$oft can market….but can’t market?
If the Zune fails in the forecast, will anybody hear?
So, Microsoft take your money, puts it in the bank and collects interest while you decide what songs you want to purchase with points.
And there is no option to pay per single purchase?
I can see this idea failing miserably.
These guys are EVIL don’t give Microsoft a dime. Oh, 8 points.
The truth is out there and it ain’t with Microsoft.
Alright math-fans, help me out here:
Microsoft sets the song price to 79 points, which most people will perceive as being inexpensive because it is less than 99. Yet, if you do the math, it’s actually slightly more than $0.99. Cute, very cute.
Does it not work out that the songs cost slightly less than .99?
Apple: Songs cost 99/100 of a dollar.
Zune: Songs cost 79/80 of a dollar.
1/80 is larger than 1/100, therefore Zune songs are cheaper. Right?