iTunes price hikes lead to lower unit sales, revenues | iLounge News

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iTunes price hikes lead to lower unit sales, revenues

Three weeks after the introduction of variable pricing on the iTunes Store, labels are seeing lower unit sales for both $.99 and $1.29 songs. Citing sales numbers from Nielsen SoundScan, Billboard reports that out of the Top 100 tracks, the 67 that remained at $.99 sold a total of 29% fewer units than they did the week before the price increase, resulting in a 29% drop in revenue, while the 33 songs that were raised to $1.29 saw an aggregate drop of 34.5% in unit sales, for a 14.7% decline in revenue. Billboard suggests that while the $1.29 tracks generated $43,000 in “extra revenue” than they might have if they sold the same number of units at $.99, Digital Music News has cited numerous sources, including executives within the major labels, as saying that overall revenues are moving downward, as unit sales are dipping far enough to produce aggregated revenue declines. [via MDN]

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Comments

1

I guess we are seeing price elasticity at work.. at .99 it was an impulse.. at $1.29 you think about it a bit more.. at least I do..

Posted by funkright on May 6, 2009 at 11:20 AM (PDT)

2

Really who would have thought. as above since the introduction of the 1.29 price i really have to like the song or searched for cheaper prices before i purchase.

Posted by mikelarry85 on May 6, 2009 at 11:50 AM (PDT)

3

I bet if we cut up this golden egg laying goose, we can get all the gold RIGHT NOW!

Posted by ort on May 6, 2009 at 12:32 PM (PDT)

4

Why the price increase?  When did price increases ever result in more sales? In the end, less sales always mean less profits. If you want sales to increase, lower prices. Music industry representatives don’t understand the real world value of their product. Your product is only worth what people are willing to pay.

Posted by Steve on May 6, 2009 at 1:24 PM (PDT)

5

Would you still buy a new car if they raised the prices by 30% overnight?

Posted by Ericc B on May 6, 2009 at 2:04 PM (PDT)

6

if Amazon is $.99 and better quality, why would I EVER use itunes to buy music?

The smart thing to do would have been to CUT prices on old music but keep $.99 as the top price.

Again, Amazon has it right, with $4.99 records

Posted by Jungleland2 on May 6, 2009 at 2:36 PM (PDT)

7

Simple, price goes up consumption goes down..

Posted by Keatah on May 6, 2009 at 3:02 PM (PDT)

8

I hate to say it, but part of me is happy to see this. I am a big Apple/iTunes Music Store supporter. But when Apple played hardball with the RIAA to keep the .99 price point, they made enemies. That is why the RIAA allowed Amazon and other outlets to sell non-DRM songs at a cheaper price. In order to give customers what they wanted (unlocked songs), Apple had to make a deal with the devil and bite the variable pricing bullet. Now the RIAA may see that even loyal customers will look away from iTMS to find a better deal. I hope this hits the music industry right in the gut!

Posted by Mitch Hale on May 6, 2009 at 4:12 PM (PDT)

9

I used to spend at least $20-50 a month on music, but since the price increase, I have turned to other sites like emusic.com and other alternative sources. I haven’t bought a SINGLE track from iTunes since.

These record execs just don’t get it, do they? Since when do higher prices equate to higher sales? Morons!

Posted by ahMEmon in Canada on May 6, 2009 at 7:13 PM (PDT)

10

We’ve been through this a million times before - NO - the record execs don’t get it.

Personally, I don’t blame Apple.  I think Steve Jobs is laughing at the record execs and saying “I told you so.”

Raising prices 30% in a crappy economy…..brilliant…..just brilliant.

They’re idiots.

Posted by chicagoTech on May 6, 2009 at 7:34 PM (PDT)

11

Yup. The price change has certainly affected my iTunes Store buying habits. Most of the hot stuff is now $1.29, so I’m not buying as much of it.

Has anyone noticed the reduction in the number of “clean” versions of songs compared to those released before April 7th? It’s more a reduction in the “clean vs. explicit” ratio than anything. But in many cases before the price change, a new pre-album single which was labeled explicit also had a clean version available. However, relatively few singles released on or after April 7th have clean versions. It’s not like clean versions of songs are not being made. Otherwise, you wouldn’t be hearing them on the radio.

Posted by Robert on May 6, 2009 at 7:44 PM (PDT)

12

Oh, and I agree with #10.

Posted by Robert on May 6, 2009 at 7:45 PM (PDT)

13

Those of you who are saying the record company execs “don’t get it” are really the ones not getting it.  The resulting loss of sales and revenue doesn’t matter to the RIAA hacks.  What matters to them is hurting itms so that it is not nearly as powerful as it once was.  The record companies have taken the game back and are making the rules, not Apple.

Posted by Jason Engel on May 6, 2009 at 7:50 PM (PDT)

14

@ #13: Well then, tell me when Amazon starts selling AAC files (which are superior to MP3 files).

Until then it’s iTunes all the way.

Posted by Robert on May 6, 2009 at 8:30 PM (PDT)

15

record companies don’t get…if i can’t get my music from apple (for $.99), i’m gonna get it for free.

one thing i will say for the system is that i’m more likely to buy a full album.  it’s a lot better value than buying 2-3-4 songs @ $1.29

Posted by c on May 6, 2009 at 10:03 PM (PDT)

16

Why would the RIAA have anything to do with negotiating Apple’s pricing?  Aren’t they are an org that protects music copyright?

And…Less units does not mean less profits if you have higher margin.  Which we don’t really know the numbers here…

And…perhaps it’s the economy?  I don’t think Apple is to concerned, as the wheels are spinning off the app store.

Posted by Chopper on May 7, 2009 at 4:52 AM (PDT)

17

What’s the old saying? “Be careful what you wish for…”?

Posted by DomArch on May 7, 2009 at 5:25 AM (PDT)

18

Jason

If the record labels are playing a game to get the ball back in their court, they’re losing a ton of money to play the game.  NBC came crawling back and prices have risen across the board - don’t forget that they raised some prices on Amazon.com as well.  And it’s not just about Apple - it’s disenfranchising music fans even more and pissing us off.  As “c” mentioned above, he/she is now looking for more free alternatives.

When speaking of the lables, I prefer the old saying, “I looked in the mirror and saw the enemy.”

Posted by ChicagoTech on May 7, 2009 at 5:37 AM (PDT)

19

As stated much above, at $0.99 it’s a complete impulse buy. A perfect example of physcological pricing tacticts at work. Are you more likely to buy something at $0.99 or $1.00? Bumping the price up to $1.29 is making people think that they’re being screwed by Apple- which they probably aren’t as I highly doubt they would start getting greedy now of all times what with the app store and economy. The record labels or whoever are almost certainly the ones to blame.

Heres a different take: Maybe the RIAA wanted to make people turn back to music piracy so they can sue some more people and make some extra cash. Given the economic situation it would be an incredibly bold and moronic move- so I’m sure they at least thought about it.

Posted by Kieran on May 7, 2009 at 9:31 PM (PDT)

20

Everyone who stated that 99 cents is an impulse buy is correct. I give you my 14 year old daughter as an example.  She is willing to spend half her allowance in the ITMS every week on 99 cent songs she may only listen to a few times “cuz it’s only 99 cents”. She quit buying music cold turkey when it went up to $1.29.  She was appalled.  I also caught her bootlegging music “cuz it’s too expensive now”.  So, which would you rather have. A teenager who spends $10-$20 a week in the iTunes music store or an avid bootlegger?  It also boils down to a matter of convienece. You can purchase music directly with your iPod. Not computer involved. All other music stores require a PC. None have an integrated store.  Just my 2 cents but the record industry needs to wake up before they become irrelevant.

Posted by Luke in DC on May 9, 2009 at 8:55 AM (PDT)

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