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Price hikes at iTunes just days away?

March 26, 2009 |  1:42 pm

The days of the 99-cent single are on the verge of ending. While Apple had previously announced that it would finally adopt variable pricing, coming after years of urging from major labels, The Times' Dawn C. Chmielewski reports today that April 7 is the target date for Apple's iTunes store to launch its tiered pricing strategy.

But wait -- now people are upset? "This will be a PR nightmare," predicted former EMI Music executive Ted Cohen, who is managing partner of digital media consulting firm TAG Strategic. "It is for the music industry what the AIG bonuses are for the insurance industry."

And that's pretty much the line Apple has been giving for years. So here's how it will work, according to Chmielewski:

True to supply-and-demand economics, the price of music downloads will be geared to the artist's popularity. Releases from new artists would receive the lower pricing, while tracks from popular acts would get slapped with the higher rate. Even classics, such as Bruce Springsteen's "Born in the USA," could retail for the higher price. Most of the 10 million songs in the iTunes catalog are expected to remain at 99 cents.

The top-selling iTunes songs at the moment include Flo Rida's "Right Round," Lady GaGa's "Poker Face" and Kelly Clarkson's "My Life Would Suck Without You." On the flip side, a label might request that a developing artist be given a lower, 69-cent price tag to help boost sales.

Curiously, however, the iTunes price hikes are in the opposite direction the biz seems to be heading. In the digital sector, iTunes' main competitor, Amazon.com, is rewriting the value of albums. Go there now, and get the soundtrack to the "Hannah Montana" movie for $3.99, a price point recently given to new albums from the likes of Lily Allen and U2 .

-- Todd Martens

Photo: Flo Rida. Credit: Atlantic Records