May 7, 2004 12:56 PM PDT

Apple: 99 cent music price tag staying

Apple Computer dismissed rumors Friday of rising single-song prices at its iTunes online music store, saying that it planned to maintain the price tag of 99 cents per song.

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.

8 comments

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No Way!
Who would believe these greedy bastards at the record labels would want to charge more and more money? Finally, through these pay per song/album services, there is a legitemate means for the industry to make sure everyone gets their money and what happens, they want more.

Look at the history: CDs cost less to produce than LPs, but the consumer gets charged more. Now here is a distribution method that has got to cost the labels next to nothing, yet by a scale you pay about the same buying a CD. Sure you get to choose only the songs you want to pay for, so 99 cents seems reasonable, plus it's legal.

You'd think the industry would be happy with the arrangement. But no!
Posted by jeff_j_black (4 comments )
Reply Link Flag
And, they wonder why people steal...
Well, here we go. Already was per song prices that are too high for the use rights you get with the purchase of song, but not they want more.

The music industry thinks theft is why sales are declining, when it isn't. The theft is only a result of the real problem and that is they charge to damn much for crap and don't let you do what you want with it (short of making copies to sell). Frankly, the music industry can go straight to hell for all I care. I haven't bought a CD in 10 years and don't plan to anytime soon. I will do with out music before I feed their greed.

Robert
Posted by (336 comments )
Reply Link Flag
Prices need to go DOWN
Apple needs to LOWER its prices, not increase them.

Look at the competition:

1. DVDs with an entire movie and extras cost $15 to $20. Sometimes on sale (e.g., Kill Bill, Volume 1) for $13.

2. www.allofmp3.com offers music for $0.05/song. You get a choice of format, choice of music quality.

3. LimeWire and Kazaa are free.

The RIAA idiots need to understand that they need to become price competitive. They don't have to sell an album for $zero as it is high quality sound and you get the liner notes. But, they have to become more competitive.

,dave
Posted by davebarnes (40 comments )
Reply Link Flag
Why?
This may be slightly off subject, but why does everyone always fail to mention Rhapsody when quoting this apparent internet-wide price per song rate of 99 cents?

I realize it is a subscription service, but the listen.com version of Rhapsody prices ALL their songs at 79 cents! Plus, if you ask anyone but Apple, Rhapsody has the largest total collection of music of anyone legal. Napster is also doing package deals which place all their music under 99 cents (i.e. 50 songs for $40 = 80 cents per song).
Posted by (1 comment )
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Rhapsody
Don't you have to pay a subscription fee to get the 79ยข
downloads? iTunes garners the most attention mainly because
it's working very well and it seems to have caught on with more
people than these subscription services have thus far. If they
had, we'd be hearing about them a lot as well.

Relating to the story: if the record labels were to raise prices,
they'd kill the whole legal online download industry. This market
is still very much developing; despite iTunes' success, there are
actually still rather few people who use it. Don't EVER toy with
pricing until the market is secure.
Posted by iKenny (98 comments )
Reply Link Flag
Don't EVER toy with pricing until the market is secure
Market secure...you know what in this day and age it will never be secure and should not be! If these vultures want to rob the consumer then they are just feeding the get it free mentality.

They jsut will never learn that you can't keep robbing the consumer.
Posted by Altaman (11 comments )
Link Flag
And they wonder why ppl steal music/movies!
God you would think these companies would learn! When CD's first came out they said the price was higher due to the cost of making them and they would come down over time. Have they come down...NOPE! In fact I believe they have gone up.

Now with no media costs at all, they are again trying to rob the consumer with higher prices. Figure it out a if you download 10 songs that is $9.90 (about $14.00 Canadian). This price in my opinion is too high now and they want to increase it!

Well you guys deserve all the piracy you get...just to bad it hurts the artists as well.
Posted by Altaman (11 comments )
Reply Link Flag
Cheaper
Walmart still 88 cents
Posted by (2 comments )
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