The Apple-owned online music service that established the 99-cents-per-track standard will boost prices on its hottest-selling songs to $1.29 come April.
Not that this is a surprise. Apple announced in January it would introduce a multi-tiered pricing structure at iTunes, with some songs costing more than a buck while others might move at clearance sale prices. But the company never said when the pricing change would occur.
Now we know. Citing “industry sources” the Los Angeles Times says the new pricing – 69 cents, 99 cents and $1.29 – takes effect April 7.
Saying they want more control over pricing and packaging, the major record companies had been after Apple to abandon its 99-cent pricing for the past couple of years. Although Apple resisted, label executives kept pushing for the change, claiming that moving away from iTunes one-price standard would help increase sales.
All business deals involve some give-and-take, and this one was no exception. In exchange for giving in on the label’s multi-pricing demands, iTunes will stop wrapping its tracks in copy-protection technology.
But is all this change a good idea?
Maybe, but perhaps not at this time. The Times cites music executives questioning the change, saying a 30 percent hike on the sticker price won’t exactly be welcomed by consumers already hit hard by the recession.
Said Ted Cohen, managing partner of digital media consulting firm TAG Strategic:
“This will be a PR nightmare. It is for the music industry what the AIG bonuses are for the insurance industry.”
Along the same line, Jim Guerinot – who manages Nine Inch Nails, No Doubt and Offspring – 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?”
However, not everyone is questioning the pricing change. NPD Group senior analyst Russ Crupnick told the Times that he estimates the average spending for online tracks has leveled off at $41 per customer.
“If you’re not drawing new people and your spending isn’t growing, it’s a natural part of the product life cycle,” to raise prices, Crupnick said.
Click here for the Los Angeles Times article.