iTunes Store variable pricing to begin April 7
Higher prices are coming to Apple’s industry leading digital download store a week later than originally planned. Still, at least one analyst thinks the music labels’ price hike will incite consumer ire in the same way bailout banker bonuses have. There’s no good way to spin a price hike in times like these.
LA Times reports that the iTunes Store will implement a new “variable pricing” policy whereby some more popular tracks will fetch $1.29, while popular though not fresh music will continue at 99 cents and golden moldies will be tagged at 69 cents.
“This will be a PR nightmare,” predicted former EMI Music executive Ted Cohen, managing partner, TAG Strategic. “It is for the music industry what the AIG bonuses are for the insurance industry.”
“The power of 99 cents will be harder for the labels to overcome than it would have been if they’d had this ability [to change prices] a few billion downloads ago,” said Frank Luby, pricing expert, Simon-Kucher & Partners, who has done work for Warner Music Group. “The longer a habit like that lasts, the harder it is to break.”
“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?” said Jim Guerinot, manager for Nine Inch Nails, No Doubt and Offspring.
The new king of music
Apple has enforced its 99-cent a la carte pricing policy since the iTunes Store came on line back in April of 2003. The recent changes represent horse trading between Cupertino and the four major music companies—EMI, Sony, Warner, Universal—with Apple getting DRM-free music and over the air iPhone downloads and the labels wrenching variable pricing from Steve Jobs’ iron gripe.
The iTunes Store became the world’s largest music retailer in the first quarter of 2008 and continues to strengthen its already dominant position.
Will this price increase result in a consumer backlash? I guess that depends on whether the labels start grabbing with one or two hands…
What’s your take?
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March 28th, 2009
That the Media companies have to be the most clueless individuals to ever have billions fall in their laps. They actual still think they are the reason people buy music.
Remember how they wanted to jack up prices after the first year and iTunes was taking off? The geniuses who were unable to even slow down the damage P2P was doing suddenly became concerned Apple was leaving money on the table.