PayPal Reduces Fees for Online Music Firms
In a press release today, PayPal has made a move to become the major fee collection platform for online music by reducing its transaction fee to $.09 plus 2.5% from $.20 to $.30 plus 2%. This is a business of counting pennies, since individual songs are priced to consumers at $.79 to $.99. Then music firms have to pay licensing fees of $.60 to $.80 per song to the labels, which doesn't leave much margin for online music firm profits . So this announcement represents a significant improvement in the potential to profit from sale of online music. From my experience as a buyer, PayPal is also significantly more customer friendly than previous micropayment systems. The 35 million existing PayPal accounts used for eBay buying and selling make this a attractive platform for building the online music business. Stay tuned!