Trouble with Merchandise Sales

I went to Richmond, Virginia, with the NCTA for a couple days last week for planning meetings for the Richmond Folk Festival. While there, we stopped in a local music store that is an old favorite of my co-workers. The store is apparently not faring well, in part due to the economy, in part because CD sales are down due to the popularity of digital music downloading. Josh spoke to someone working there and reported back to the rest of us this fun fact: To compete with the downloading trend, some of the suppliers have been discounting CDs to only $6 or $7 dollars. The result has been an apparent skyrocket in sales, but only in the 80's hair metal band genre.

Next, during one of the meetings, we were discussing how to drive merchandise sales at the festival. We want to use some kind of incentive to encourage the marginal patron to buy. (Those who want to buy already are, those who don't, won't, but we want to capture the people on the fence about it - right at the margin.) Generally, this is done with price discrimination pricing structures - where the front row theater tickets are still $100, but you can sit up in the balcony for just $30 - so you don't lose the revenue of those willing to pay more, but you capture the "maybe" buyer with the incentive of reduced price tickets. Anyway, the problem with these folk festivals is that admission is free, and CD prices are all set by the artists, not within our jurisdiction to offer at reduced prices. One suggestion was made of offering a prize of a complete set of CDs - one from each artist at the festival - to one lucky winner in a contest you were entered to win with the purchase of any piece of merchandise. Not bad. But not sure that's enough to drive sales. Is there a way to offer incentives to marginal buyers to drive sales, without changing prices?

I'm also wondering why some markets can support $20 for an official poster (the Ann Arbor Street Art Fair), and some struggle to sell many for $5 (Richmond Folk Festival). The merchandise is similar - reproduced from original art work with similar appeal. The easy answer would be in the demographic differences between the audiences, which I don't have enough information about to report on, except that attendees of art fairs are there to purchase things, attendees of free music festivals go in without the expectation of purchasing things. But I wonder if it also has to do with the heritage of the event - the art fair being 50 years old, and the folk fest being 5 - and people kind of "wanting a piece" of something with more lineage? Any other ideas?