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Apple faces off with record labels over iTunes pricing

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By LC Angell

Contributing Editor
Published: Saturday, August 27, 2005
News Categories: iTunes

According to the New York Times, two major record companies are pushing for an increase to Apple’s 99-cent per song pricing on the iTunes Music Store.

“Two and a half years after the music business lined up behind the chief executive of Apple, Steven P. Jobs, and hailed him and his iTunes music service for breathing life into music sales, the industry’s allegiance to Mr. Jobs has eroded sharply,” the Times’ Jeff Leeds reports. “Mr. Jobs is now girding for a showdown with at least two of the four major record companies over the price of songs on the iTunes service.”

“If he loses, the one-price model that iTunes has adopted could be replaced with a more complex structure that prices songs by popularity. A hot new single, for example, could sell for $1.49, while a golden oldie could go for substantially less than 99 cents. Music executives who support Mr. Jobs say the higher prices could backfire, sending iTunes’ customers in search of songs on free, unauthorized file-swapping networks.”

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Comments

1

This is simply the result of the music executives being greedy.  WIth iTunes they are making tons of cash by doing nothing.  No production costs.  No distribution costs.  They just collect the money.  So I guess their bright idea is to mess it up.  Good going. 

If tracks are more than $0.99, I’ll go back to P2P networks.  Doesn’t the music industry get it?  We hate them.  The ease and price of iTunes is the only thing that “brought me back”.  They pull this and I’m out for good.

Posted by m. sherman on August 27, 2005 at 10:49 AM (PDT)

2

I think the prices are amazing, make the “hottest” hits 99c and oldies cheaper!!

Posted by Ryan on August 27, 2005 at 10:50 AM (PDT)

3

I am not and will not pay ANY more than 99¢ for a song, especially one with DRM.  ANY companies that push for such a change will loose my interest and future sales from myself for both CDs and iTMS.  Stupid record labels, no wonder their sales are droping like flies.

Iggy hmm

Posted by TheIguana in Calgary, Alberta, Prarires, Canada, North America, on August 27, 2005 at 10:53 AM (PDT)

4

I think the hot singles will go up to $2.99 soon…I say within a year.

All the people who are saying they will go back to P2P should realize that they may not be the core consumer at iTMS. 

The core consumers may be people who never used P2P and would not consider using it.  Those who would go back to P2P may have never really left P2P in the first place.

For the most part, I believe those who will pay $.99 for any track will pay $2.99 for a hot one.

Posted by Talking Madness in Los Angeles on August 27, 2005 at 11:11 AM (PDT)

5

If anything, record companies should be pushing to drop prices. The lower the price, the more likely someone is to buy something. In the case of digitally distributed files there is no overhead other than storage (free for all intents and purposes) and bandwidth (fairly insignificant for the size of each file). The primary goal should be to increase volume of sales and not to increase the profit per sale, it’s a completely flawed goal that will do nothing but harm those very profits the greedy shites want to line their pockets with.

I won’t even pay $0.99 for a DRM’d lossy file, so why do they think I’ll cough up more?

Posted by Code Monkey in Midstate New York on August 27, 2005 at 11:17 AM (PDT)

6

$0.99 for a single song is the highest price most people are willing to pay. If record companies push to make “popular” songs more expensive that completely destroys the purpose of music. Everyone has their own taste in music and right now every song on iTunes is $0.99 regardless of how “popular” it is. Record companies are greedy and their greed will destroy people purchasing their music digitally online. Most people who made the switch from P2P to buying on iTunes can easily switch back. If they don’t go back to using P2P their are other means of getting music for free. So don’t push your luck or you’ll lose a large amount of customers. What two record labels are they? Everyone should boycott buying music from those labels if this happens.

Posted by Cyantre on August 27, 2005 at 11:34 AM (PDT)

7

I can’t get over how greedy record companies are.  No wonder people resort to stealing music when the labels will do absolutely anything to get even the smallest amount of cash from the consumer.

Posted by Toxikated on August 27, 2005 at 11:43 AM (PDT)

8

I think Apple should tell these two companies, “Okay, sure. What price would you like us to sell your singles for?” And whatever the labels say, they get. But Apple should also make sure that the companies can not offer the same downloads elsewhere for a cheaper price.

Now here’s the thing… if those two labels are labels where “the biggest new hits” are coming from, I guarantee that they would not remain so for very long after people started realizing that only their songs were priced higher than any of the others.

Posted by vertigo25 on August 27, 2005 at 11:52 AM (PDT)

9

If the prices become more expensive, people willl start using P2P networks again and buying CD’s instead.

Posted by Daniel Gilmour on August 27, 2005 at 12:00 PM (PDT)

10

You have to admit that the music executives have proven their genius. CD sales are going through the rood, there have never been so many new best selling artists, and the quality of music has never been higher. It makes total sense to increase prices and abandon old losing strategies.

Oh, never mind.

Posted by david on August 27, 2005 at 12:06 PM (PDT)

11

I agree with TheIguana. I was attracted to Itunes because 1. They don’t have a subscription cost like so many other downloads like..music match and all of them ..I really liked that about Itunes. and 2. everything is 99¢..To me thats a pretty decent price I really don’t understand why they want to change up now. If they do however, I think i might result in just buying the CD’s again.

Posted by Dawn Marie on August 27, 2005 at 12:15 PM (PDT)

12

The problem with threats to just buy CDs again is that if these same labels have their way then within the year the audio discs being sold will no longer be rippable into open digital formats without a lot of hooplah and similarly loss of quality.

Posted by Code Monkey in Midstate New York on August 27, 2005 at 12:25 PM (PDT)

13

I hesitate to buy songs even at $.99, they’re really killing themselves here. For one thing, all the music has DRM which basically limits your use of something that is yours and you paid money for! not to mention the songs are all lossy

Posted by mike on August 27, 2005 at 12:31 PM (PDT)

14

i don’t know where you get the information like that DAVID. music industry’s CD sales has not been really good. P2P stealing has gone down but that did not result in high CD sales.

I am just completely baffled at these executives’ ignorance. First of all, we pay 99 cents for less-than-optimal quality songs (128kbps). Secondly, it is DRM protected. Thirdly, CDs are increasingly embedded with copy-protection, leaving mp3 players high and dry. Now they want price-hike.

for $9.99 (or 11.99), we get the CD contents without the booklet, completely eliminating collection value. If they raise the song price to $1.49, then obviously album price will go up (probably to $13.99). Who da heck is going to buy songs online?

Since I think 99-per-song is a ripoff, if they raise the price, I am outa iTunes market. Limewire, here I come!

Posted by Make Trades Fair on August 27, 2005 at 12:39 PM (PDT)

15

Make Trades Fair, I think David was using a bit of sarcasm there…

I dont buy songs online, since they are both DRM’d, and lower quality than CD’s.  But I know plenty of people who don’t know/care about that, and its my guess is if they did raise prices to say 1.49 a few people would stop buying, but that would be offset by the number of new downloaders who still wouldn’t mind paying that.

Posted by Sarcastic Bill on August 27, 2005 at 12:53 PM (PDT)

16

You can go back to buying used CDs. Not only do you screw the record industry, the used CD is usually about the same price as iTunes (of course without the ability to pick and choose songs—this is if you buy the entire album).

I still remember before file sharing that the used CD market was the industry’s chief concern. Boy, times are a-changing.

On the bright side, it seems that anything that over charges or generally screws over the consumer usually doesn’t end up lasting.

Posted by Amalea Fisher on August 27, 2005 at 1:01 PM (PDT)

17

i agree—the record labels are guaranteed to lose business. they’re banking that they won’t lose enough business and that they’re profits will increase, which is likely to be the case, at least at first.

a large chunk of nerds like us will likely switch to p2p, unless they do something wacky like offer 192kbps aac at the higher price, and over time that network will continue to grow, eventually getting us back to where we were in 99-01. it would at least show some signs of compassion if they GAVE us something for the 50% price increase, which is really quite extreme if you think about it. of course, the issue of whether the record companies have souls i think has been settled long ago…

here’s a weird thought…what if the labels started releasing all new tracks with different pricing? all the tracks that are 99 cents now will stay at that price, anything else released could be priced higher or lower. i doubt it would ever happen, but it makes for an interesting thought experiment.

Posted by pewtey in columbus, oh on August 27, 2005 at 1:27 PM (PDT)

18

Well it’s only fair to raise the prices by 50% because the record execs are working so hard to find new talent… um, no wait, it’s just all teenybopper bands isn’t it? 

Oh, well they’re investing so much money in supporting the ITMS that they want some return, don’t they?  Oh, no, wait, Apple are running it without any RIAA support.  Never mind. 

But production costs have gone up so… er, wait a sec, digital music requires no disc duplicating, no warehouses, no raw materials, just hard drive space, which costs fractions of a penny per megabyte.  So I guess costs actually go down when you distribute digitally, don’t they? 

But then there’s all those RIAA funded advertising for the ITMS on TV, that’s gotta cost… er, wait, Apple are the only ones advertising it aren’t they?  In fact, the only RIAA advert was that one with all those kids who were busted for file swapping, wasn’t it? 

But it’s still fair that they want more money for the same thing without doing any extra work because… because, um… they need to keep the shareholders happy?  The Feds are starting to get nosey about that money that should be in the pension fund but isn’t?  The CEO’s daughter wants a new Porche for her birthday?

Posted by phennphawcks on August 27, 2005 at 1:33 PM (PDT)

19

What’s the deal?  They can’t afford the really good grass they want to smoke?  That’s their tough luck, don’t take it out on us customers, it’s bad karma.

Posted by Phoenixfury on August 27, 2005 at 1:46 PM (PDT)

20

Talk about biting the hand that feeds you.  CD sales are still, and have been, in free-fall. Steve Jobs just about single-handedly resuscitates the industry, and now the greed-heads at the record labels show their gratitude with this kind of grumbling.  These people are pathetic.  Apple is well on its way to selling ONE BILLION songs, LEGALLY.  Consumers are EMBRACING iTunes to the tune of 80%-plus market share for digital music, while CD sales CONTINUE heading south.  Come on record labels. . .lie prostrate before your saviour, before it’s too late.

Posted by John E. Broderick on August 27, 2005 at 4:06 PM (PDT)

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