Now Available at iTunes: Price Hikes for Music
by Peter Kafka
Posted on April 7, 2009 at 4:15 AM PT
Apple has finally rolled out the “flexible pricing” plan it announced earlier this year at its music store. If you’re a casual music consumer and that phrase doesn’t mean anything to you, let me rephrase it: Many of your favorite songs will now cost 30 percent more at iTunes.
In theory, the new pricing scheme Apple (AAPL) struck with the big music labels swaps out the old deal–99 cents a song–with three new tiers: 69 cents, 99 cents and $1.29 a song. But based on the (admittedly) cursory check I just conducted, finding a song priced below 99 cents will be very, very rare. In fact, I have yet to find one.
I did find plenty of music priced at $1.29, though. Six of Apple’s Top 10 songs are now at the new tier, which means that if you want buy “Boom Boom Pow” by the Black Eyed Peas (really?), you’re going to have pay up.
That’s pretty much as expected. The labels–that’s Warner Music Group (WMG), EMI Music Group, Sony (SNE) and Vivendi’s Universal Music Group–have always argued that hot new singles should cost more than not-hot new singles, because…. well, actually the logic there that gets a little fuzzy.
But whatever: If the labels can get away with charging more per song, more power to them.
But I don’t understand why they wouldn’t make a point of aggressively discounting some of their older catalog stuff at the same time. Online music sellers have found, via repeated experiments, that consumers are price-sensitive and that if you charge less, they’ll buy more. And last time I checked–and every time I’ve checked for the last decade or so–the labels needed to sell a lot more music, not less. Right?
Comments
Lower the price and sell more? That can’t be right. Don’t you make more money if you just charge more?
Posted by Steve Berman at April 7th, 2009 at 4:54 amGood thing … I’m almost sure the record labels and artists are not making enough money given the Obama administration will raise taxes on the rich in order to pay for huge government spending.
I’m going to pass on the $1.29 tunes.
Posted by Joe Allen at April 7th, 2009 at 6:31 amRight on Peter. Considering 95% of music consumed in ‘08 was “illegally” pirated, is this move really going to do anything to curb that trend? How close can we get to 100%??
From first glance, it’s pretty disappointing to see how few have gotten the $.69 price point. That pricing holds the key to this variable pricing model’s success.
I touched on these issues earlier today myself: http://bit.ly/1MsIph
Posted by Adam Wexler at April 7th, 2009 at 8:28 amGenerally, classical music is still available at iTunes for $0.99 a track. But I think that accounts for about 5% of total recorded music sales.
I did not find anything at *under* $0.99.
The situation is similar at the Amazon MP3 store.
It will be interesting to see how consumers react to this. It could be the canary in the coal mine for video.
BTW, I note that YouTube has many classical and operatic selections available for free streaming. It was particularly entertaining to watch a video of the Wolf’s Glen scene from Der Freischutz which is rarely produced anymore. I have listened to the music countless times but have never witnessed a stage production.
The YouTube experience was enlightening. It is a concrete example of the Long Tail.
This is Third Generation Television
http://www.insidedigitalmedia.com
Posted by Phil Leigh at April 7th, 2009 at 8:37 am