ON APPLE POSSIBLY RAISING PRICES ON iTUNES

ONE STEP BACK

(UPDATE 10.18.05:  Joel Spolsky has a terrific post titled "Price as Signal"on how the music industry wants to use variable pricing as a method to maintain control of their artists and marketing position with consumers...perhaps iTunes and/or someone else can make variable pricing and price signaling work from a consumer point of view rather than the industry again commandeering this marketplace tool for their own purposes...RECOMMENDED)

The Wall Street Journal re-confirms earlier stories on the possibility of Apple shifting from it's so far successful one track for $0.99 pricing policy to variable, and higher prices, due to pressure from the music companies.  Specifically,

"Music company EMI Group PLC said it expected Apple Computer Inc. to increase the price of popular songs and cut those by unknown acts on its iTunes Web site within a year."

Of course there's no comment on this from Apple, but it looks like the grand paid online music experiment that is iTunes will likely take a step back with higher prices.

Back in May, I'd posited in a post on online music that:

"...the price per track (should) drop from $.99 to $.30 or less, as it's likely to do as the music industry takes out the current $.60 plus subsidy for packaging and distributing physical CDs that it uses to protect that distribution channel and revenue stream."

Well, that's what market forces would do if the music industry represented a market-driven economy rather than an oligopoly driven one.

The recent PR fiasco by Sony BMG Music on selling music CDs with potentially harmful and invisible software is yet another indication of how far their senior managements are in terms of understanding their customers.  Hopefully the controversy forcing their recall of millions of CDs after infecting hundreds of thousands of computers networks, will give them reasons to pause and amend their strategies, but somehow I'm not that optimistic.

A short-term beneficiary of a rising per track music prices would be the online subscription services offered by folks like Yahoo! Music, Real's Rhapsody, Napster and others.  But they too will likely come under pressure to raise prices if the music industry does get it's way with Apple.

As they say, progress online sometimes is two steps forward, one step back.  Hopefully, it stops just there.  Otherwise the illegal file-sharing networks may see a re-surgence in popularity. 

Comments

[Simon]

Or they are hoping Apple will raise the price? Part of the bluffing game going on between Apple and the labels? I wonder if Apple will actually lower the price on other music so hit music is 99c.