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.
- Crash snarls I-15 near 10300 South 8:18 a.m.
- Iran to limit cooperation with IAEA 8:17 a.m.
- Ft. Hood unit deploys 8:11 a.m.
- Clinton: allies can help turn tide 8:00 a.m.
- Polanski begins house arrest 7:53 a.m.
- U.S. Marines launch large offensive 7:46 a.m.
- Somalia blames al-Qaida for bombing 7:40 a.m.
- Suicide attackers kill 35 at mosque 7:36 a.m.
- Nov. jobless rate falls to 10 pct. 7:30 a.m.
- AP: GM to announce changes 7:17 a.m.
- Hate not limited to 1 in-state rivalry
- Mr. Football 2009: Tuni Kanuch
- Phoenix signs off on LDS temple
- Harpring's NBA career is over
- Aggies shoot past Cougars
- Toddler dies trapped under mattress
- Crews to seal Nutty Putty Cave
- Doctor deems Mitchell competent
- MVPs wrap up stellar prep careers
- Felt's Facts season recap
- Hall reprimanded by MWC
406 - Max Hall issues apology
393 - Hall's pain reflects self-betrayal
361 - Why is Y. ignoring spew of hatred?
287 - Utes won't respond to Hall
278 - BYU says Hall incident resolved
247 - Letters: Liberal because LDS
220 - 2 citations issued at Y.-U. game
188 - Aggies shoot past Cougars
175 - Hate not limited to 1 in-state rivalry
163
University of Phoenix Utah is collecting "oft-forgotten gifts" like...
First, a big thank you to all who posted questions here for me to ask...
I tend to agree with "Endorsements". If we are to buy his product, golf, and...
coach is smart enough to take a food taster with him. Maybe a U frosh in...
To Anonymous 3:39 26-23, HAHA...Grow up and take a loss like a man. The...
If you play you have to pay--old Chinese proverb
Yeah, Mitt, it's that easy. I'm sick and tired of Republican politians...
ya really, I wouldn't pay $10 to eat lunch with him right now. What's going...
Since, in your opinion, the only thinkers and decision makers on the planet...
for U fans to back off! 26-23!
I guess it's true that this is a problem that parents aren't aware of -- no...
Wow what memories — green unis & Bernard King I remember going to...

