iTunes US may soon be forced to lift its 99 cent price policy

28 Aug 05 01:40 by Seán Byrne in category Uncategorized To news archive

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Apple launched its iTunes music service almost 2.5 years ago and to date it has managed to sell over 500 million tracks. In the US, they currently have a market share of about 75% for digital music download sales and about 80% of the digital audio player market. So far, they have managed to keep its 99 cent one price policy in the US, however this is likely to change with increased pressure from two major record labels: Sony BMG and Warner Music Group.

When iTunes launched in Japan, both Sony BMG and Warner Music Group refused to license music to iTunes due to their pricing policy. While iTunes offers music from these record labels in the US, unfortunately their contracts are due for renewal early next year. Apple’s chief executive, Steve Jobs will do everything he can to keep this fixed pricing. Sony pointed out at a technology conference several months back that Steve Jobs gets two revenue streams (music sales and iPod sales), while Sony only gets one, which it claims is extremely small.

The record labels would like to charge a lot more for new singles, such as up to $1.49 a pop, while selling oldies for much less than Apple’s 99 cent pricing. Even if the record labels gets their variable pricing, this will introduce another problem: Raising the prices, which the consumers already find high enough as it is could end up backfiring upon the record labels by encouraging existing iTunes customers to head back to downloading music illegally from file sharing services.

src="http://www.cdfreaks.com/contentimages/newsimages/1204502100" align=right border=0
>Two and a half years after the music business lined up behind the chief executive of Apple, Steve Jobs, and hailed him and his iTunes music service for breathing life into music sales, the industry’s allegiance to Jobs has eroded sharply.

Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service.

If he loses, the one-price-fits-all model of 99 cents a song that iTunes has adopted could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for a $1.49, while a golden oldie could go for substantially less than 99 cents.

Music executives who support Jobs say the higher prices could backfire, sending iTunes’ customers in search of songs on free, unauthorized file-swapping networks.

Signs of conflict over pricing issues are increasingly apparent. This month, Apple started its iTunes service in Japan without songs from the two major companies — Sony BMG Music Entertainment or Warner Music Group — leaving artists like Avril Lavigne, Beyonce and Rob Thomas out of the catalog because the companies refused to license their music to iTunes, said executives involved in the talks.

Read the full, rather lengthy href="http://www.detnews.com/2005/technology/0508/27/tech-294943.htm"
target=_new>article here.

It would be nice to get variable pricing on iTunes such as lower prices for older music, however as the music industry is also determined to switch consumers from file sharing services to online music stores, raising the price beyond 99 cent is actually much worse than leaving the pricing fixed as it stands. As Sony BMG and Warner Music Group refuse to license music to iTunes Japan, there is a very good chance that they will end up forcing variable pricing to go ahead. Otherwise, the US iTunes service may also lose these two major labels.

Feel free to discuss about iTunes and other online music download services on our Music Download, Peer to Peer (P2P) & Legal Issues forum.

Source: detnews.com

13 Comments

joebob23: Posts: 3; Posted on: 28 Aug 05 04:57

isn't sony ISP going to start allowing it's own customer on it's isp to share music over in England soon??? That's probably why they are forceing itunes to give them more dough. i think .

heystoopid: Posts: 307; Posted on: 28 Aug 05 07:42

"Greed is Good!" so says gordon to his young eager protege, well at least hollywood's fictional movie, has since gone on to become a reality movie! These are the same people who charge for polyphonic ring tones, they made their money on sale of LP's, made better profits from sales of cd's and even greater profits on the reissues of the older LP's in that format, and now they are seeking the entire cake(cream and all) after letting Stevie baby do the hard work in validating the new distribution of lossy compressed DRM format. Is the there no end in sight for this industries greed and and customer last attitude!

layback: Posts: 3; Posted on: 28 Aug 05 07:58

Whats new, greed rules music buyers have been paying through the nose to these people since vinyl ruled. If you keep paying them the money they will keep sticking it to you. Quit buying and you will see them change.

neo1918: Posts: 259; Posted on: 28 Aug 05 08:46

Quit buying and they will just file more lawsuits. Please people, buy more music so I don't get sued because some clerk accidentally mistyped an IP Address!

Ranmacanada: Posts: 290; Posted on: 28 Aug 05 08:54

This is just pure greed, and nothing else. It seems that they forgot that people were not buying 2-3 years ago because prices were too high, then they all got caught with their pants down and were found guilty for price fixing. Now they want to fix prices again at a rate that they can rape their customers for buying their priduct. WHen are these people going to get thei heads out of their asses and realize that they can not continue to rape and pillage us. Raise the price and sales will fall. the MPAA makes 70 cents off EVERY SINGLE iTunes song sold. There is no packaging, no distrobution fees, NOTHING. This is pure profit delivery, and yet they want more money more money more money. Stop support these corrupt organizations that have written enough of their fair share of laws in a corrupt government that only listens to money and forgets the REAL reason that they were placed in power in the first place. The PEOPLE! Vote with your wallet, cause obviously congress is no longer listening to their constituants, and no longer cares what you and me think because we can not bribe them with the millions of dollars that these organizations can!

I Have Piles: Posts: 586; Posted on: 28 Aug 05 11:59

It is about time all the major artist started selling their recordings directly from their own sites and cut the RIAA and the BPI out of the middle, then you know the money is going to the artists you like.

Quakester2000: Posts: 1119; Posted on: 28 Aug 05 13:23

Its disgusting, these music tracks are already high enough in price and yet they want to charge more, well i hope the record companies go bankrupt its their fault as they are ripping consumers off so they will go elsewhere. Whats the point buying digital if the cd will be cheaper, they are so out of touch those companies.

Zohg: Posts: 34; Posted on: 28 Aug 05 21:25

They're already charging more than what you pay per song on cd in a store. New releases are usually on sale for even less during the first week or two. Now they want to raise the price instead?

CORRSA: Posts: 298; Posted on: 28 Aug 05 21:48

serves u idiots right the ones who dload from itunes that is i hope they put the tracks up to $1.50 COZ YA MUPPETS and deserve to be ript off you the buyer as allowed this to happen instead of walking away like the clever ones i walked away in the uk 4 months ago when blockbusters raised theier rentals to £3.95 for 2 nights when i can rent 3 at a time for £15 a mnotrh i average around 12 and guess what blockbuster uk is £98 million in the red yippppiiiieeeeee i hope they sink with all the rest of greed and coruption. any way soon the buyer will realise that he she as the final say in a sale not the fat cat at the top wake upppppppppppp

Zod: Posts: 462; Posted on: 28 Aug 05 22:21

i still don't see the point of buying music online. Even at a buck a track, an album would cost 12 bux online? Pretty much the same price as in the store. However if I buy it in the store, I get the cd, artwork, jewel case, and I can rip it anyway i see fit. Which pretty much means making high quality mp3's. At least at 99 cents it seemed other people were interested. I'm not the kind of person to only buy a song, either I like an album or I don't. So i'm guessing if they force apple to raise their prices, they could really see some backlash from the people who are willing to use the service.

magaman: Posts: 20; Posted on: 29 Aug 05 01:39

iTune and the record company will try to get as much money from the buyer. That is why I use musicstacker from www.musicstacker.com. Discover the potential. Look Smart! I realy like napster over other inline store.

Zardoz66: Posts: 3; Posted on: 29 Aug 05 20:35

iTunes should drop the 2 lables as it does not fit there pricing...

nytvd: Posts: 256; Posted on: 30 Aug 05 21:34

itunes is good and buying per track is awesome. that way i only get the songs i like and am not stuck with a 12 track CD that only has 2-3 good songs on it. when i spend 12 or 13 or 14 bucks i get 12 or 13 or 14 songs that i wanted... BUT - if prices head north of 99 cents - i will not be a buyer of those tracks. is there ANYTHING that sony can touch these days that does not turn to crap? (psp aside.....)

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iTunes US may soon be forced to lift its 99 cent price policy

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