Apple Debuts Tiered Song Pricing on iTunes; Removes All DRM

Authored by Mark Hefflinger on April 7, 2009 - 10:20am.

Cupertino, Calif. - Apple (NASD: AAPL) on Tuesday introduced its new tiered pricing structure at the iTunes Store, where new release and popular songs may now be priced at $1.29, while older, catalog tracks may be sold for 69 cents each -- although the majority of songs are expected to remain at the current 99 cents price point. The major record labels have long pressed Apple to institute variable pricing at the iTunes Store; the new pricing also coincided with the removal of digital rights management (DRM) restrictions from all songs sold at the store.

Anonymous music industry executives, expecting a backlash at the price increases, told Reuters that for every one song they hike to $1.29, they will be reducing the price of 10 songs to 69 cents.

"If we can gain traction with $1.29 that will be good for greater margin," another anonymous label executive involved in the negotiations with Apple told Reuters.

Apple's iTunes Store was used by 87% of all U.S. digital music buyers in 2008, compared with 16% who used Amazon's (NASD: AMZN) MP3 store, according to NPD Group.

http://snipurl.com/ffwi9 (AP)

Published in DMW Daily, April 7, 2009

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Comments

Where all the Entrepreneurs at?

Submitted by Steven Masur (not verified) on April 8, 2009 - 1:58am.

iTunes Store raises prices to $1.29 for the songs people want, and labels think it's OK because the songs people don't want are 69 cents? That's their best idea for how to launch a variable rate pricing model? No new releases? No exciting new exclusive content you can't get elsewhere? Come on. Where all the entrepreneurs at? iTunes Store is crying out for good competitors who really know how to sell music! Who will step up to the plate? There is money being left on the table here!