May 05, 2008

By By Antony Bruno, Denver

Warner Music Group is testing a dynamic pricing system for digital albums provided by partner Digonex technologies.

Under the agreement, Digonex will basically act as a middleman between WMG and the various digital retailers selling WMG content. The company's technology analyzes how full albums are purchased -- at what rate, in what timeframe, and in what volume -- and then recommend either raising or lowering the price based on the incoming data.

Contrary to popular assumption, it is not a simple case of raising prices on better-selling albums and lowering prices on slow movers. In some cases, the company recommends lowering the price on a hot-selling album in order to spike even more sales and increase overall volume.

WMG's test of the system will begin this month, for a limited time and on a limited section of the label's catalog. The companies did not say how long the test will run, nor did it identify exactly which digital retailers are participating or which WMG artists will be involved.

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