San Francisco - Capitulating to insistent demands from the major labels, Apple (NASD: AAPL) on Tuesday introduced a three-tiered variable pricing scheme for songs sold from its iTunes Store, and further announced that its entire library will be available for purchase free of digital rights management (DRM) restrictions by the spring. Beginning in April, labels may choose to sell older tracks for 69 cents and newer, popular tracks for $1.29, or continue with the standard 99 cent price tag.

Customers will be able to upgrade their entire library of previously purchased, DRM-wrapped songs to the DRM-free iTunes Plus format for 30 cents per song, or 30% of the album price.

The major record labels have long been demanding that Apple allow them to sell tracks at variable prices from its iTunes Store. In 2007, Universal Music Group declined to sign a long-term contract to sell its tracks on iTunes over the issue.

Apple also announced that iPhone 3G owners may now purchase and download tracks from the iTunes Store over a 3G connection, complementing existing Wi-Fi support.

"We are thrilled to be able to offer our iTunes customers DRM-free iTunes Plus songs in high quality audio and our iPhone 3G customers the ability to download music from iTunes anytime, anywhere over their 3G network at the same price as downloading to your computer or via Wi-Fi," Apple CEO Steve Jobs said in a statement.

"And in April, based on what the music labels charge Apple, songs on iTunes will be available at one of three price points -- 69 cents, 99 cents and $1.29 -- with many more songs priced at 69 cents than $1.29."

The company also introduced a new virtual instruction feature in its GarageBand music creation application, designed to teach users how to play musical instruments including guitar and piano.

Along with lessons from a virtual instructor, users may also pay $4.99 to download video lessons taught by musicians including Sting and John Fogerty.

Apple's announcements come at its final appearance at the annual Macworld trade show, which highlights products for its Mac platform.

The keynote address, usually delivered by CEO Steve Jobs -- who disclosed yesterday that his gaunt appearance is the result of a hormone imbalance for which he is being treated -- was made instead this year by Philip W. Schiller, Apple's senior vice president of worldwide product marketing.

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Related Links:
http://www.apple.com/pr/library/2009/01/06itunes.html

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