The founder of budget airline easyJet has confirmed he is moving into the digital music sector, sparking fears of a price war. As the digital arena becomes increasingly competitive easyJet's Stelios Haji-Ioannou has confirmed a deal with London based download platform Wippit which will see the creation of easyMusic, selling tracks for as little as 25 pence a shot.
Following Real Network's half price download promotion in the US used to launch their new Harmony software last month, and with company's like Walmart already undercutting iTunes et al in America, the standard download rate of one US dollar per track may well be slashed as different players compete for mainstream custom.
With profit margins in the digital sector already tight for the people who run the download platforms, some fear major players in the sector will start to pressure labels and artists to reduce their costs. Because the production costs of a digital track are the same oblivious of how many people download it, this favours bigger labels and mainstream artists, who could reduce their income on each individual track because their overall profit margin will still be good. More niche artists would struggle to cover production costs if they have to cut their profit margins to just a few pennies a sale.
Announcing the deal with the EasyGroup, Wippit boss Paul Myers told CMU: "This is a spectacular opportunity for Wippit and we're proud that EasyGroup president Stelios Hajiloannou has chosen Wippit to wear the famous colours of easyMusic. Their ideals are parallel to ours and we believe that easyMusic will be a first stop destination for music fans seeking a no nonsense service."
easyMusic is likely to launch in the UK prior to Christmas - no word as yet regarding the service's global ambitions.