$5 Footlong & The Music Industry

“Five. Five dollar. Five dollar footlooong. “

You’ve seen the commercials and tapped your foot to the song, haven’t you? Have you sung along? If not, I am impressed as the spots has been everywhere.

In and effort to “get back to [their] heritage” [Jingle Hell], Subway has knocked the price of certain foot-long sandwiches down to a measly, paltry, all-time-low of 5 US Dollars. Notwithstanding the state of the US economy, $5 for lunch in New York City is a dream come true for many.

At the behest of a coworker, I have ventured to Subway multiple times in the last few weeks, and it appears that the new promotion is a success. Lunchtime is crowded. Deliveries are wrapped, packed, and sent on their way quickly all while the serving line moves along swiftly. Recently just a limited time offer, the $5 foot-longs are now here to stay, proof that Subway has connected with their customers. Their offer allows people to enjoy lunch over 2 days for an extremely low cost. Other than Chinese food, where quality might be significantly lower despite the same price, there may not be a better major chain deal out there.

What can this new campaign teach the record industry about sales and marketing?

The intersection of Subway’s campaign and the record business occurs at $5. Label heads are oblivious to this number, as well as to the positive connotation it has within millions of people. If Subway can create growth from decreasing prices but offering the same (if not bigger) meal than before, then what precludes record rEtailers and labels from figuring out a strategy to do the same? Volume at stores and priceless word of mouth (for what could appear to be a buzz inducing “stunt”) may make up the difference in sales.

For years music retailers have sold 10-12 track CD albums at anywhere from 7.99 to 19.99, marked up from 4-8 bucks wholesale. The digital revolution brought Apple and the iTunes Music Store promising 99 cent tracks and $9.99 albums. Considering these downloads come without packaging or liner notes, 99 cents has proved to be awfully expensive. Consumers continue flocking to the vibrant file-sharing sites and services, leaving both traditional brick and mortar stores and digital retailers for 100 percent free music (save for some questionable ethical costs).

Physical retail would have an extremely hard adjustment to make, considering many are getting rid of space in their stores for CDs, but built on a strong and organized foundation, they can work towards creating a music sell venture that acutally attracts new customers.

Digital retailers have more leeway when it comes to the $5 price point. Enhanced art, more personalized content, and increased interactivity can be built in to the new $5 DA (digital album). Costs such as staff brainstorming sessions and outsourced online content development is exactly where money should be spent, so if the staff is young, motivated and has a clue about the Internet, sales will skyrocket.

The hardest sell is obviously to the labels and those providing the content. The cost of marketing, recording, and promotion built in to a major label release are just too high for them to swath out a large percentage of their profit, hoping that volume will make up for it. Decreasing those built-in costs is a subject for another post, as it leads to serious trickle down issues that go back to the artist and their management teams. While I do think the major labels can do this profitably, they will not be the first to be successful.

The differences between digital and physical are night and day, so I look forward to the next online retailer who decides to take a chance, convince the suits, and build a music brand based on the elusive $5 price point.