iTunes To Charge $1.29 For Top Tracks
March 26, 2009 at 5:31 AM (PT)
The world's largest music store, APPLE'S iTUNES, plans to boost the price of many hit singles and selected classic tracks to $1.29 on APRIL 7th, breaking the psychological barrier of 99 cents in what could be the first big test of how much consumers are willing to pay to download individual songs, reports THE LOS ANGELES TIMES.
Although the date for higher prices has not been publicly announced, APPLE has been notifying record labels it will go into effect on that date, industry executives said.
Wouldn't it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?
The move, part of a new "variable-pricing" strategy that will also lower the price of selected songs, is an attempt by the music industry to wring more revenue from digital downloads in the battle to offset declining CD sales. Label executives contend the new pricing will allow them to offer packaged downloads of songs that might entice consumers to spend more on music.
Some music industry veterans are criticizing the 30% hike price, saying the timing is tone deaf because it comes in the midst of a recession and at a time when spending for online music appears to have reached a plateau.
"This will be a PR nightmare," predicted former EMI MUSIC executive TED COHEN, who is managing partner of digital media consulting firm TAG STRATEGIC. "It is for the music industry what the AIG bonuses are for the insurance industry."
JIM GUERINOT, who manages such bands as NINE INCH NAILS, NO DOUBT and OFFSPRING, said the industry's pricing was moving in the wrong direction if it hoped to compete with still rampant music piracy. "Wouldn't it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?" he said.
APPLE INC. set the 99-cent-per-song rate in 2003 when it launched the iTUNES STORE. The company long resisted pressure from the music industry to allow flexible pricing, arguing that it would inhibit sales. APPLE changed its tune in JANUARY, however, announcing that it would begin selling music at three prices: 69 cents, 99 cents and $1.29, based on wholesale costs set by the labels.
In exchange for flexible prices, the digital tracks will be offered free of anti-piracy software, enabling the buyer to make unlimited copies and play the songs on any device, which is not currently possible.