Peter Kafka

Recent Posts by Peter Kafka

Apple’s Upsell: The iTunes Pass

itunes-passAt Steve Jobs’s insistence, the iTunes music store proposition to customers has always been simple: You pay us 99 cents, you get a song. But that’s starting to change.

Earlier this year, the music labels finally got Apple to agree to a tiered pricing plan–69 cents for old songs, 99 cents for most songs, and $1.29 for songs the labels think they can charge more for. And today, Apple (AAPL) introduces a new wrinkle–the “iTunes Pass.”

What’s that? Oddly enough, given Apple’s marketing mastery, the company doesn’t do a bang-up job of explaining it. But here’s the gist: Pay us a premium and we’ll give you a bunch of songs and some other stuff.

The first offering comes from EMI Music Group and Depeche Mode: $18.99 gets you the band’s new album, a bonus track and “great music and video exclusives before and after the album’s release over the next fifteen weeks.” The band starts a big tour in April, so presumably some of the bonus goodies will come from stuff that’s recorded on the road. The deal expires in mid-June, but you’ll be able to keep –permanently–whatever the band puts out until then.

Some of my blog colleagues are describing this as an Apple move toward subscription services, but that doesn’t make any sense. Subscription services give you access to whatever you want, as long as you’re paying a monthly fee (or a variation on that). This is just a fancy version of the old-fashioned upsell: Instead of paying $9.99 for an album, or 99 cents for a single song, Apple and EMI are trying to extract some high-margin extra dollars out of you.

Ever bought a value meal at McDonalds? Same deal.

And there’s nothing wrong with that. If the record labels are going to survive, they’re going to have find ways to get consumers to pay more than a buck a transaction.

Not sure how effective this method will be–even if you’re still a huge Depeche Mode fan, don’t you want to know in advance what you’re getting for your extra money? But doesn’t hurt to try.

Time for the obligatory YouTube clips! Here’s what I believe to be the band’s biggest hit (I’ll confess that I’m not a big DM fan):

And here’s my favorite Depeche Mode cover: