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

21

Greed is the main thing that has pushed the price of songs.  Everyone wants to make money.  But, you can’t expect people to jump up and down with a price hike especially in an economic crisis.  Look at Wal-Mart.  They TRY to sell things as cheap as possible.  See how much $$ they make every year?  I bet they make more money than those high-end boutiques that sell overly expensive items in London.  They may sell one item for $10,000, but Wal-Mart can sell 10,000 $50.00 items in the same amount of time.

Posted by Richie in TN on May 11, 2009 at 2:34 AM (CDT)

22

@Chopper (#16) -
Since the iTunes Music Store began with it’s .99 songs, the record companies have been hounding Apple to switch to variable pricing. They agreed to supply music at the .99 price point because they were not convinced that people would pay for a music download and forgo the piracy. They used clauses that would allow them to withhold certain albums, artists or songs, as well as locking songs via DRM, to try and force Apple to play ball. That did not work. So they started making better deals with other suppliers (Amazon for one) that allowed them to sell the songs DRM-free and cheaper. This was an attempt to show Apple they were not the only horse in the race. The RIAA did not like the power Apple had acquired in the new digital music age. Customers demand is what finally made Apple rethink their stance and agree to variable pricing. I think Jobs & Co. new that sales would take a hit and knew that it would ultimately be the record companies that would end up losing out. I just hope that is the case in the end. RIAA greed has been well documented and something needs to force them to change. Apple has come as close as anyone in that regard.

Posted by Mitch on May 11, 2009 at 12:33 PM (CDT)

23

1.29 is really too much for a song, at least for me. I really enjoyed the .99 song and since the price has gone up, I have not boughten any of the songs that I would like to download as they are 1.29. If they were .99 I’d buy them in a heartbeat. The recording lables need to allow itunes to put the prices back at .99 otherwise they will continue to see a drop in sales and people will go back to getthing their music by other means.

Posted by Lindsay on May 13, 2009 at 9:10 AM (CDT)

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