Apple introduces variable pricing

As a regular customer of the iTunes digital music store, I have become accustomed to clicking “buy song” and spending my hard-earned seventy nine pence to download another single. So too have the 75 million customers who have over the last six years bought around six billion songs from the iTunes store.

But now Apple has reached an agreement with the music industry so that variable pricing will come into play during 2009. From the 1st of April, music will be priced in three bands costing either 59p, 79p or 99p. Presumably the bargain basement price is for older songs from artists that have long gone out of fashion or who never made it big in the first place! The premium price will be for music available through the higher quality service iTunes Plus.

Although there are thousands of independent labels, the global music publishing industry is best described as an oligopoly dominated by Universal Music Group, Sony BMG, Warner Music Group and EMI. Apple has also announced deals with all four major record labels to provide tracks free of anti-piracy “digital rights management” or DRM.

How will Apple customers respond to the move away from flat-rate pricing? I cannot see any significant increase in market demand for songs available at the lower price and the price for most albums will remain at £7.99 for the time being. The key decision seems to be the move away from digital rights management and with it Apple’s long-standing commitment to protect the market share of the iPod and all of its variants.

This BBC article looks at the changes in Apple’s iTunes pricing policies.