May 7, 2004 12:56 PM PDT
Apple: 99 cent music price tag staying
Reiterating comments made by Chief Executive Officer Steve Jobs last week, an Apple spokeswoman said the company is maintaining its single price tag for individual songs. The comment came in response to an article in the New York Post reporting the likelihood of higher prices as a result of new contracts with record labels. As earlier reported, some full-album prices have already begun to climb on the service.
"These rumors aren't true," Apple spokeswoman Natalie Sequeira said. "We have multiyear agreements with the labels and our prices remain 99 cents a track."
Apple's commitment to the 99 cent retail price point--which is shared by other music services such as Musicmatch--comes in spite of wholesale prices for music that are already beginning to fluctuate, according to record labels and other download services.
The big music labels are eager to move to a system where they can price prerelease or top singles differently than back-catalog tracks. This variable pricing has long existed in the offline world, and will help them make more money from the most popular music, while increasing demand for older tunes through lower prices, they say.
"The problem is, the systems that everyone built to get things going were built to get things going," said one top record executive in a recent interview. "The easiest way to do that was to have fixed pricing. (But the services) have been expanding those systems so they can vary pricing."
Some labels have already begun passing on these variable wholesale prices to the online services, executives have said. This has appeared in occasional rising album costs, but like Apple, none of the download stores has yet passed along the higher wholesale costs of singles to their customers.
Executives at other music services have said that the shifting wholesale costs would likely find the download stores beginning to experiment with both higher and lower prices over the next year. Apple, which retains a majority market share, will likely influence the decisions at services with smaller audiences.
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