"An act of desperation".
This was music industry analyst Phil Tripp's comment after BigPond and Destra slashed their online music download prices for the month of April.
Tripp said it was a tactical move to compete with the entry of a new player in the Australian market, Ninemsn. "They deliberately slashed the prices on that day because they thought ninemsn will be launched that day as well, but it has been moved to May," Tripp said.
"By cutting their price, they are showing how desperate they are to sell music online. Low-balling to compete will ruin the future of the industry," Tripp added.
However, Destra spokesperson Richard Jabara said they were not threatened by the entry of Ninemsn in the market and welcomed more new players. "We are absolutely not scared of Ninemsn. In fact, we welcome the competition. It legitimises that the business is viable and keeps all of us on our toes," he said.
Jabara also said both BigPond and Destra clearly stated that the price is a promotional offer and therefore has no effect on the future of the industry.
"Destra and our competitor have introduced this as a promo for the month of April and prices will be back to the usual level at the end of the month. It is not low-balling because it is a promotional offering for a limited time. However, in the future when the size of the market will increase, then consumers may enjoy cheaper prices," Jabara said.
Tripp also commented that the current WMA format of both Destra and BigPond's tracks are not compatible with Apple iPod users, therefore isolating a part of the market.
Jabara replied that within three months, Destra will also be offering songs in AAC format compatible with the Apple iPod.
"Our statement of claim is that all songs will be 'platform neutral.' We will provide the music in whatever platform the consumers want it. We don't want to have technical barriers because we are not married to any technology," Jabara said.
As of the moment, Destra is working with record companies to come up with a subscription method for their customers. They are also working with ARIA to come up with an agreed download chart where the music downloaded most often will be posted.