Joel's take on iTunes variable pricing

Joel Spolsky is usually right on target with his commentary, and his piece today on the possibility of iTunes variable pricing is spot on.  Nail, head, hit. Seriously, he's right on this one. The bottom line is this: variable pricing has nothing to do with actual demand. It has to do with perceived value. We used to play this trick when I worked at Blockbuster all the time. If you go to "the wall" of new releases you'll see one or two copies of say, "Spun," but there are probably hundreds of copies of "Pop Star." When the average 'merican browses through, he's likely to assume that with all those copies, the movie's got to be good. Same thing happens with generic food, if it's cheaper, how can it be just as good as the more expensive brand name? The music companies want to create a perceived value of junk like the Britney's, and downplay the goodness of less mainstream fare. Joel begins with a very good analogy based on movie theater distribution and sales, which truly illustrates this point. My suggestion? Don't mess with a good thing. Would you rather pay less for less popular music at the risk of diminishing returns for lesser-known artists, or do you think $.99 is the way it should always be?