iTunes song price hikes, drops coming April 7 | iLounge News

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iTunes song price hikes, drops coming April 7

Apple will begin to offer variable pricing on songs sold through the iTunes Store beginning April 7, according to a new report. Citing music industry executives, the LA Times reports that while the date has yet to be officially announced by Apple, the company has been informing record labels that the change will go into effect on that date. Apple announced in January that it would be moving to a pricing model where tracks sold for either $0.69, $0.99, or $1.29, based on the wholesale cost set by the labels; in return, Apple was able to secure DRM-free music from all three remaining holdout labels.

Despite the DRM-free nature of the more expensive downloads, some music industry insiders are criticizing the move, particularly in the current economic climate. “This will be a PR nightmare,” said former EMI Music executive Ted Cohen, who is now managing partner of digital media consulting firm TAG Strategic. “It is for the music industry what the AIG bonuses are for the insurance industry.” Jim Guerinot, who manages several groups including Nine Inch Nails, No Doubt and Offspring, said that raising pricing was the wrong move if the industry hoped to compete with still rampant music piracy. “Wouldn’t it make sense to try to price it cheaper instead of squeezing the handful of people who are still willing to pay for music?” Guernot said.

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Comments

1

It’s too early to judge how good or bad of a move this will turn out to be. Will we start to see most back catalog material down to $0.69/track and $6.99/album, most recent material holding at the $0.99/track and $9.99/album, and only new releases at $1.29/track and $12.99/album? Or will the industry make another move toward obsolescence by using this agreement to effectively jack the price up on everything people actually want? And will the labels force iTunes store competitors like Amazon.com to follow suit? Or will this just be one more advantage they allow iTunes’ competitors to keep in hopes of unseating iTunes as the single biggest music retailer in the world.

Regardless, it’s the quote from Jim Guerinot that hits upon the real crux: recession or no recession, the days of getting even $6.99 an album in reality are over. The percentage of music fans who never download music for free is a minority percentage, probably on par with the percentage of music fans who never pay for music at all. The industry needs to accept that they are competing for sales from the new music fan, the one who sometimes pays and sometimes downloads for free, and every price adjustment will change the probabilities of whether people open their wallets or their bittorrent client accordingly. Much like how DRM punished the legitimate customer, variable pricing is just more of the same.

Posted by Code Monkey in Midstate New York on March 26, 2009 at 11:05 AM (CDT)

2

But seriously (excuse my naivety)... do people still pay for music on a regular basis?

Posted by David on March 26, 2009 at 11:24 AM (CDT)

3

Flawless reply Code Monkey!

Posted by Ryan on March 26, 2009 at 11:26 AM (CDT)

4

So will they manage to convert everything to iTunes Plus in time? A lot of Warner titles are still DRM protected (e. g. Depeche Mode, Led Zeppelin, Peter Gabriel).

Posted by gewappnet on March 26, 2009 at 11:54 AM (CDT)

5

This price drop is necessary.  Catalog title CDs are selling for $5-8 on Amazon.

Posted by Galley in Greenville, SC on March 26, 2009 at 12:04 PM (CDT)

6

Code Monkey makes good sense here. We’ll have to wait to see how this plays out.

I will not have a problem with this if, say, I go find a “Best of Jimmy Ruffin” album for $5.99 - $7.99. But if I go and find that album is still $9.99 and the new ten-track album by some popular artist is suddenly $12.99 or higher… I can see myself skipping out and visiting Best Buy and Wal-Mart more than ever before.

I have no problem paying $1.29 for a hot new single and $0.69 for the old Motown favorite, but if they just try to gouge me, I will look elsewhere for music.

Posted by Germansuplex on March 26, 2009 at 5:56 PM (CDT)

7

You guys won’t be happy until the labels just say “fuggit - take our products for free” will you?
Seriously.
You b*tch about everything, and brag about stealing product because you don’t like the RIAA/labels.
It makes me ill.

Posted by slb on March 26, 2009 at 6:13 PM (CDT)

8

“You guys won’t be happy until the labels just say “fuggit - take our products for free” will you?”

That’s the point: effectively everybody is already doing this. iTunes sells two billion songs a year, meanwhile there’s probably that many downloaded for free each and every week. There’s no way to stop it, there’s only trying to find ways to capitalize on what consumers are already doing. Put tip jars on artist’s sites; it’s better to get $1 from 30,000 people who downloaded your album for free than hoping they’ll buy your next one. Drop prices closer to what the average music consumer is paying in reality by offsetting continued high prices through downloading; it’s far better and far more fair to sell 200,000 albums at $3.99 than 50,000 albums at $10.99.

There is reality and there is sticking your head up your arse and claiming the air is very fresh and clean. You and the labels are engaging in the latter.

Posted by Code Monkey in Midstate New York on March 26, 2009 at 6:34 PM (CDT)

9

Yeah *ss-monkey, ignore theft and it will all be better.
You’re right, I’m sooo stupid.
I have to wonder how much “code” you write for free?

Posted by slb on March 26, 2009 at 7:12 PM (CDT)

10

I think Code Monkey’s right in both posts. I’m sure in a really shinny happy world with shinny happy people everyone would pay what ever price the music companies set and that would be the end of it, but that world is not reality. His point about price and sales ratios makes good sense why not sale more albums for less, instead of selling less albums and having more people just steal the tracks?

So far they haven’t shown that they’re willing to budge on pricing as a whole. Don’t get me wrong I pay for each and every song I listen to but unless you show Dick and Jane teenager your willing to work with the budget they have, then they’ll continue to steal. I have no problem paying 10.99 I do have a problem with the entire Recording Industry pretending to try progress but not acknowledging that they will need to understand the behaviors of their consumers and look at why they’re stealing music and address those problems. Until they do they can keep on crying but as they say in Wisconsin, “thats just hard cheese.”

Posted by Travis on March 26, 2009 at 7:59 PM (CDT)

11

Shall we also officially ban the use of an alternative to petrol because it creates unemployment in the car industry? Shall we ban the internet because people go less to public libraries? Situation with file-sharing is what it is, the technology IS there. Let’s put it this way: I lived abroad and it used to cost a fortune to keep in touch with my family on the phone in the old days. Now I do it online, with a camera and for free (granted you pay for broadband but so you did for renting a phone line). Now if someone says to me: “No, that’s wrong. You need to go back to the phone and pay for your calls!” What the ****? It’s the same with filesharing. You guys seem to be all very well-off and religiously pay for your music. Good on you. But teenagers (the future of the music industry, least we forget) have other habits which are kinder with their pockets. I don’t get it. Nobody ever thought it was a problem passing around mix-tapes and copies of movies on VCR, as I´m sure you guys all did. What´s the difference? It’s the same principle but on a massive scale. $5.99, $6.99… who cares! Youngsters are paying $0.00! You can’t go back in time. Money is not in selling music any more. FACE IT!

Posted by David on March 27, 2009 at 5:13 AM (CDT)

12

#11, et al

Don’t you people realize that the artists depend on selling their stuff to make a LIVING?  How much food can you buy with NOTHING (what pirates are paying)?

All pirates are doing is causing there to be less content available. A lot of the artists will just give up if they can’t earn a decent livelihood at music.

Posted by JustME on March 27, 2009 at 9:03 AM (CDT)

13

@David: you seem to be mistaking reality with your delusions; it’s simply the opposite extreme of someone like slb.

“Youngsters are paying $0.00! You can’t go back in time. Money is not in selling music any more. FACE IT!”

Nobody in this set of replies except slb seems to be “not facing it”, but you are deluded if you think this is a sustainable model. Somehow, those youngsters have to become people who pay for music, not necessarily via the current business model, which is broken in more than one way, but music fans have to become paying music fans in some manner.

If there is no money in “selling” music, there will be virtually no music with more than local followings in the not so distant future. Once we remove the possible incentive of monetary reward, most music becomes an inherently local phenomenon since musicians will have no way to earn money other than performing, and viral internet distribution can only go so far in creating a national or even international audience.

File downloaders resort to the compensation from performances and merchandise mantra too easily as justification for downloading when, in reality, this just doesn’t work. Merchandise has price points that are, on average, considerably higher than buying the music through approved channels - if you weren’t impressed enough with the album to pay $11.99 at Best Buy, you probably aren’t going to spend $20.00 + shipping to order a t-shirt from the band’s website. Going to live shows is equally problematic. Bands can only travel to so many places, and the places they travel to are based upon how popular they are in a given locale. So, again, if you weren’t impressed enough to spend $11.99 on the album, please explain to me why you’ll drive several hours and spend $10 to park and another $40-$100 on a ticket. As it is, we’re already in a counter productive spiral: with revenues from music sales dropping, labels are insisting on percentages from ticket sales, this both drives down compensation to artists further and raises ticket prices for fans, it also raises the popularity threshhold to tour widely in the first place. So, fine, I believe that people will go see an artist when they happen to come to their town, or the next town over, and the ticket price isn’t too high, but that essentially becomes some sort of lottery for both fan and musician, which, not coincidentally, is the same sort of scenario we’re in with downloading.

Mass availability and consumption of music has indeed permanently altered the value fans assign to any one album. The problematic disconnect is that the music industry has failed to adjust to this very real and permanent change. So we’re left with two very real problems. The first is that even among people willing to pay for music, they’ll only pay for music they believe is worth the prices being charged in spite of a general and severe devaluing of music. Whether paying music fans react to these high prices by downloading other music to “adjust” average prices to a more personally realistic level, or simply don’t download/listen to other artists, the result is the same: an unequal and unfair compensation system above and beyond the already arguably unfair compensation systems put in place by the labels. The second problem is the generation of youth who have been “paying” your average $0 instead of an average of $2 or whatever an album. $0/album simply doesn’t work in the long run, and unless the music industry can figure out how to raise that average price, the music industry will cease to exist in any fashion that matters. The math is easy to figure out: if the average price recouped per person downloading your album is $0, it doesn’t matter how popular you are, a billion times zero is still zero. If, however, you raise that average compensation to as little as $0.25/downloaded album, suddenly getting a few hundred thousand people around the world listening to your music might not put you in a mansion, but it will keep you employed as a musician. The solution is somewhere in the middle of a free free for all and believing you can somehow keep the pricing and profits of the music industry the way they used to be, and both fans and the industry need to “FACE IT”.

Posted by Code Monkey in Midstate New York on March 27, 2009 at 10:03 AM (CDT)

14

this will compel people to use limewire and frostwire

Posted by nick on March 27, 2009 at 4:41 PM (CDT)

15

Well, Code Monkey, that was a very knowledgable post and I have to say I subscribe to everything you say. Merchandise and touring are not an alternative to keep the music business afloat. I realised that a long time ago, from the fact that I don’t go to more concerts or buy more t-shirts just because I buy less records. Quite the opposite. I can also refute the theory that you don’t harm fledging artists because you wouldn’t discover them and buy their records anyway. True, but the problem is that famous or unkown, the records artists sell still amount to “0”.
So, yes, the model is not sustainable. But I still think that filesharing is there to stay and keeping the old model of putting a price to listen to music is like dragging a dead horse. An analogy: It’s new year’s eve in a big city and public transport cannot cope with the amount of people flooding through the gates, so they reluctantly open the doors. Everybody goes through for free like a stream and then YOU, all righteous, decide to pay for your ticket while people passing by look at you thinking you’re stupid. That’s the feeling one can have when paying for a download.
So, the hot potato is in the industry’s hands, not on the consumer’s. They need to change the whole model to survive because, for good or bad, there’s no way back, as sad as it may be for artists as well. The gates are open and there’s no way people are gonna pay for their ticket, and that is not being delusional. It’s reality.

Posted by David on March 28, 2009 at 5:44 AM (CDT)

16

@David - Don’t get me wrong, I am not anti-file sharing in any way, it IS the new radio. I am simply pointing out that what many consumers are doing today isn’t sustainable. As you say, the hot potato is in the industry’s hands - will they work to cultivate a sense of gratitude and ethics in downloaders by doing something as simple as embracing a “tip jar” so people can make small payments for music they discovered through file sharing, or will they continue to force consumers into this mad all or nothing scenario that exists today.

Even that youngster with a PayPal account set up by their parents can be taught to throw a quarter toward some band they’ve been listening to 24/7, and when that youngster is a gainfully employed adult they can throw that same band a few bucks if they’re still listening to them. Viral distribution through filesharing is, essentially, the modern form of busking, only the labels refuse to open the guitar case for money for fear of legitimising what is already legitimised in people’s minds. It’s nuts precisely because it engenders the sort of attitude you talk about (the looking at the paying customer like they’re stupid) even though in reality the people paying $0 are potentially more stupid.

To me, one of the oddest thing is the insisted parity between physical product and downloads. I remember the period when both cassette and CD were both still vibrant distribution schemes; cassettes cost roughly half what the CD did. Same music, but an open admission that not all formats are equivalent (and the cassette even cost more to produce than the CD). This ties in well with the notion of jacking at least some downloads to a fixed price of $12.99 for some period. Even assuming this is limited to hot new releases, it’s madness. $12.99 is the just about the most you’ll ever pay for a hot new release at a normal box store (and it’s usually less). The disconnect could not be greater. The person buying online downloads is choosing the convenience over going to the store or waiting on an order to be shipped and subsequently ripping the CD. If there’s one thing there’s no shortage of for downloading for free, it’s the hot new releases, so raising prices above the physical product seems guaranteed to raise the likelihood of people opting for free. They may make $3 more per sale, but I find it dubious the net profit when the reduction of sales is taken into account will be worth this “victory” for the labels.

Posted by Code Monkey in Midstate New York on March 28, 2009 at 8:47 AM (CDT)

17

OMG - a tip jar?
Are you guys effing kidding?
Do you have a tip jar for your freakin’ paychecks?
No wonder the world has gone to $hit.  If this is a cross-section of society, it’s over.
Hello Roman Empire…

Posted by slb on March 28, 2009 at 9:32 PM (CDT)

18

“Are you guys effing kidding?”

So, basically, you’re suggesting that the solution is to start smashing down people’s doors and executing them on the spot or spending tens of millions of taxpayer dollars to imprison downloaders along with the murderers and rapists. Is that right?

Because that is the only way they’ll ever reverse what is already reality. The fact is that every day there are hundreds of millions of people around the globe deciding what they want to listen to and going out and doing just that. They don’t steal anything tangible (legally and technically, they don’t steal anything at all, but pointing that out to people like you usually just results in stammering and incoherent grunts, so we’ll let the word stand), they don’t need to leave their house, and there is no feasible way to stop them short of international governments cooperating to spy on every man, woman, and child with so much as data plan for their cell phone and then flat out executing people on the spot or coming up with such incredibly harsh sentences that nobody would ever consider so much as photocopying an album cover for a school project.

There is literally an entire generation of people around the globe who will never see anything wrong with file sharing in general. They’ve grown up with the reality of having media on demand for their their entire cognizant lives. There is no re-education camp big enough, no corporate sponsored propoganda campaign persuasive enough, to bring them around to your way of thinking. The other truth you refuse to consider is that in this “competition” they already hold all the power, and the governments and music industry hold virtually none. It really is as simple as finding a way to capitalize on what people have been doing and will continue doing in a manner that lets all parties come away with something instead of this mad insistence that the party with no real power gets to set 100% of the terms. Things like tip jars or so people can pay what they believe downloads are worth are among the more likely to succeed. Things like demanding everybody stop downloading music for free and start buying all their media from licensed vendors at fixed prices, not so much.

The funny thing about dinosaurs like you is that you can’t see that your way of thinking doesn’t make the so-called problem better, it makes it worse. The longer we leave children growing up with media on demand without any practical way of directly compensating artists for downloading, the more adults we will create who don’t have any sense of value for music. The anti-downloaders like to cry a good river about how it’s creating a culture of people who see music as valueless and disposable, but it’s your own all or nothing approach to the problem that all but guarantees this result in so many. “Just say no” doesn’t work with drugs, sex, or, nowadays, file sharing. The best you can ever hope to actually achieve is harm reduction and it’s high time people like you got the hell out of the way and let the real adults deal with the situation.

Posted by Code Monkey in Midstate New York on March 29, 2009 at 12:11 AM (CDT)

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