While Apple has so far managed to keep up its fixed song pricing where ever it has launched its iTunes store, the EMI Group announced at a press conference that they believe that Apple will start offering multiple prices with the next year. Like singles sold on CD in a shop, the individual track pricing would be based how popular and old the music is.
For
Apple, offering multiple track pricing will upset its simple single pricing
policy where the customer always pays the same price regardless of what song
they buy. While variable pricing would allow older tracks to be sold more
cheaply, the main reason EMI as well as Warner Music Group and Sony BMG are
pushing Sony to introduce variable pricing is to get more profit out of hot
selling songs, as well as to compensate for falling CD sales. So far, Sony BMG refuses to
license its music for iTunes Japan and Australia until Sony can get control of what iTunes charges for its music.
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That one-price-fits-all structure may be on the way out, though. Today EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year. Apple officials were unavailable for comment. If Levy is correct, the new pricing scheme would mark a turnaround for Jobs, who has argued that a buck a song was an easy to understand proposition for consumers and a victory for the music business, which has been calling for the move for the past several months. |
While most consumers seem happy with Apple's 99 cent pricing considering how iTunes has sold around 600 million songs over iTunes globally, there will be mixed reactions should iTunes offer flexible pricing. Those into oldies will be at an advantage, while those who mainly download chart topping music will effectively become penalised.
On the other hand, flexible pricing does make sense for the labels since they can charge their own pricing rather than let the music stores fix their price. For example, imagine if a shoe shop decided to fix a price of $50 on all pairs of shoes. In order to make a profit, the shop would have to force its suppliers to supply all of its goods for under this price. Assuming the majority of suppliers were happy to do this, customers who normally go for the pricier items would see the shop as a bargain, while others looking for a very basic pair would see the place as a real rip-off. Pretty much the same scenario applies for iTunes' current pricing.
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Source: Forbes - Business News
