While the perceived value of digital music alone may be difficult to sustain over the long-haul, consumers appear to value scarcity and a physical connection with their favorite artists. The following article points to research, which suggests that consumers may be willing to pay more for digital music if the deal also includes the equivalent in a physical CD. The theory being that while the digital content is perceived as “free,” the physical CD has tangible value and therefore worth purchasing, even at an enhanced price point. By extension, couldn't the same be said for merchandise? Buy a t-shirt and get a free download, or buy the CD and get a free t-shirt?  The bundling and new marketing opportunities are nearly limitless.  

Reprinted from Hypebot.com: 

Neil Cartwright of  UK online marketing agency Million asks the question:

Could a simple change in pricing strategy increase album sales?  I read an interesting experiment in Predictably Irrational, a new book by Dan Ariely. It runs like this:

 A real advert in The Economist magazine promoting annual subscriptions offered three pricing levels, and in an experiment 100 students were asked which one they would choose (answers in brackets).

   1. Internet only $59 (16)
   2. Print only $125 (0)
   3. Internet and print $125 (84)

Obviously no-one chose option 2 since the addition of the Internet version in option 3 was perceived as ‘Free’. However, crucially, option 2 provided an important psychological ‘decoy’, as evidenced when the experiment was repeated without it...