Will yahoo music subscriptions go up or down?
Yahoo Inc. has decided to double it's price for yearly subscriptions to download music, from $60 to $120 annually. Although Yahoo's prices will still be below that of their competitors, Napster Inc. and RealNetworks Inc. (who charge just under $15), once the subscription for Yahoo is over, the already downloaded songs cannot be used and these downloads are not compatible with Apple's ipod, which makes up about 3/4 of the market for portable music players. Do you think this change in price will effect Yahoos sales and take away the advantage of going with this company, or do you think that since the price is still lower than that of their competitors, Yahoo will keep production and quantity demanded up?
1 comment:
I think the increase in sales and total revenue, is depended on if yahoo has a inelastic or elastic demand curve, so the question is which one is it? I would guess that it is elastic becuase there are a lot of competitors, such as i tunes which is compatible with the i pod. I would guess that becuase it is elastic a rise in price would cause sales and total revenue to decrease.
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