Changes to iTunes prices raise music labels' hopes
LOS ANGELES — Although Apple Inc. announced this month that some songs sold on its market-leading iTunes online service would be available for 69 cents instead of the 99-cent tag Apple had insisted on for years, the change won't necessarily put more money into the pockets of music lovers.
In fact, record companies are the ones that plan to come out ahead.
While some songs will be 30 cents cheaper, popular songs likely will be marked up to $1.29. That price breaks a psychological $1 barrier and prepares consumers for a new strategy by labels to bundle songs, videos and other exclusive content together — all in the hopes of reversing years of falling music sales.
According to NPD analyst Russ Crupnick, the music industry has been faced with a vexing question as fans bought more digital singles but fewer albums: "As the album as we know it goes away, how do we replace a $12 or $13 item with something that costs more than 99 cents?"
If the new variable pricing can make several songs packaged together seem like a relative discount, it could finally entice some consumers to pay more.
"You've got them spending $4, when yesterday they were spending 99 cents," Crupnick said. "Is this going to be the salvation of the industry? No. But all these incremental things that we do will be helpful."
Music sales have declined in seven of the last eight years. The industry peaked in 2000, only to face the advent of the file-sharing program Napster, which made it easy for people to trade songs for free. Since Apple CEO Steve Jobs introduced iTunes in 2003, downloads of single digital tracks have exploded, but not in the volumes necessary to offset what last year was a 20 percent drop in sales of physical albums, which hold 10 songs or more.
The ability to increase online sales by charging 69 cents for some tracks, while reaping higher profits on more popular songs at $1.29, was so important to record labels that until last week they had withheld licensing of over-the-air downloads to Apple's iPhone, keeping it a somewhat dysfunctional mobile music gadget. Wireless music purchases on the iPhone had previously been possible only inside Wi-Fi hot spots.
Now that Apple and the music business both got what they wanted, the pricing changes figure to be replicated on other song-selling sites as their existing music-licensing deals expire.
"I think it's going to affect everyone's pricing but I don't think it's negative," said Bill Nguyen, co-founder of music retailing site lala.com, which sells songs for 89 and 99 cents and songs that can be played only online for 10 cents. "You're going to get more bundling. There'll be more discounts."
Recent comments
Perhaps if new music was worth buying.....
Thinking for myself | Jan. 15, 2009 at 10:11 a.m.
This is true. The music market has gone down in the last 7 of 8...
Kiersten Roden-McCarthy | Jan. 14, 2009 at 2:42 p.m.
- Utes focus on game, not 'GameDay' 11:27 p.m.
- Writers contest deadline is Nov. 20 11:27 p.m.
- 4A: Thunderbirds dynasty lives on 11:26 p.m.
- RSL plans to attack early, often 11:25 p.m.
- 2 accused of nearly flattening officer 11:24 p.m.
- 4A: Brown plays big for Timpview 11:24 p.m.
- Photo: A feast for the poor 11:23 p.m.
- 4A: Springville 29, Dixie 21 11:12 p.m.
- ESPN suddenly loves MWC 11:10 p.m.
- 3A: Juan Diego 35, Wasatch 14 11:04 p.m.
- SLC council OKs gay rights policies
318 - TCU showdown has big implications
195 - Senators want food tax restored
158 - Editorial: Mormons and gay rights
143 - Will state consider gay rights law?
137 - Utah Jazz fall apart against Kings
131 - Letters: Strange breed in Utah
119 - TCU 4th in AP poll; U. 16th, Y. 22nd
119 - Utes remain silent about BCS
113 - S.L. vote pending on gay protections
110
Maybe someone out there can help me understand how raising the state...
the line play happens like that when you have 5 WR with no extra help. ...
1 -1-2005 - FIESTA BOWL - Utah 35, Pittsburgh 7 12-29-2005 - Emerald Bowl -...
badger is a beast - nuff said
Amen. We should all be concerned if it is Army protocol to transfer a...
Should be a good exhibition type game for the Aggies to help them get ready...
I could take the legislature seriously if they cut their salary and benefits...
I'd love to have the Deseret News pay for me to eat at all these places. How...
i have never (in the last four years since my children started attending lone...
"The church is against all sexual encounters outside of marriage. True. But...
Congratulations coach Wong, Van Orden, etc. Way to have these boys prepared...

