In an economy hit with swinging job cuts, collapsing demand, and negative growth, the geniuses at Apple Inc have decided to give their customers a much-needed break by raising the price of the hottest, newest songs to $1.29 on iTunes. April 7 will see the introduction of a “variable music pricing” system, where individual tracks will be offered at 69¢, 99¢, and $1.29 depending on their popularity.
The creators of everyone’s favorite monopolistic media player seem to have caved in to the pressure from record companies, who have been arguing for a long time that this type of scheme will enable them to entice consumers to spend more by offering packaged downloads of songs.
Russ Crupnick, a senior analyst for NPD Group (or should that be senior apparatchik for global corporations), argues “If you're not drawing new people and your spending isn't growing, it's a natural part of the product life cycle [to raise prices].” Crupnick estimates spending has hit the ceiling at $41-per-customer, despite U.S. digital music sales increasing by 27% in 2008 to $1 billion. As a payoff for increasing prices, the tracks will now be offered without anti-piracy mechanisms, which will bring smiles to the faces of those of us who get a kick out of seeding major-label content across the internet.
It does seem a bizarre decision, nevertheless, when you consider the economy is in a worse state than at any time since the 1930s, and consumers can already access many of these tracks for free from streaming services like Spotify and Imeem. Furthermore, Amazon’s MP3 store already offers variable pricing, but no individual track exceeds 99¢.
Former EMI Music executive Ted Cohen predicts, “This will be a PR nightmare. It is for the music industry what the AIG bonuses are for the insurance industry.”
