As expected, Apple on Tuesday introduced variable pricing on iTunes, meaning that some popular tracks now cost $1.29 instead of $0.99. Less expected: Amazon.com has followed Apple into the fray. Scroll down today's list of top downloads, and you'll see a few tracks at $1.29.
I just stopped believing.
It was only a matter of time, but I didn't expect the price hike to come on the same day, given all the noise Amazon's been making about a special promotion in the U.K. (0.29 pounds for some selected track, down from the usual minimum of 0.59). I can't imagine Amazon's excited about raising prices in a recession--they're probably responding to price increases by the record labels, which were made possible by Apple's capitulation. Good luck with that!
Update at 9:45 a.m. Wednesday: It's not just Amazon. I heard from a contact at another large online music company that the impetus behind the new pricing models is indeed coming from the labels. Apparently, they approached all the major stores and asked them to begin selling certain songs for $1.29 on Tuesday.
Check out Rhapsody and Wal-Mart (which is selling tracks for $1.24, in keeping with its "5 cents cheaper" pricing strategy).
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According to a report in today's Los Angeles Times, Apple's iTunes Music Store will begin offering variable pricing for single-song downloads, raising the price of the most popular tracks to $1.29 while lowering the price of other tracks to $0.69. (CNET's Greg Sandoval broke the original story when Apple announced this variable pricing plan back in January.) Some industry players quoted in the story point out that raising prices in the worst economy since the 1930s doesn't make much sense--especially since, as I've pointed out many times in the past, iTunes competes with a huge number of songs that are priced at $0.
This is especially true now: illegal file-trading has been around since the early Napster days, but there are an increasing number of free or cheap legal streaming services out there like Spotify, Imeem, Lala, and Songerize. Then again, none of these services offer what iTunes does: a simple way to buy songs and get them directly onto your iPod or iPhone. I imagine that customers will continue to use a wide range of streaming services to discover new music, but when they actually want to buy, iTunes will remain the default choice.
Beginning Apr. 7, many of these selections will probably cost $1.29.
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