“After years of complaints, last year the music labels finally got what they wanted from Apple–the ability to raise prices on their songs,” Peter Kafka reports for AllThingsD. “Last April, iTunes introduced a ‘variable pricing’ scheme, which gave the labels the ability to move prices from 99 cents a song to $1.29 (and for some tracks, down to 69 cents).”
Kafka reports, “The results? Music sales are slowing.”
MacDailyNews Take: Shocking.
Kafka reports, “Warner Music Group said this morning that it has seen unit sales growth at Apple’s iTunes decelerate since the price increase: Industry-wide, year-over-year ‘digital track equivalent album unit growth’ was at 5 percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.”
“Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a ‘net positive’ for Warner. But he also suggested that in hindsight, perhaps it wasn’t a great idea to raise prices 30 percent during a recession,” Kafka reports. “So here’s the question for the book industry, which has been working very hard to boost the price for its digital goods: Which lesson do you learn from this?”
Kafka writes, “My gut is that the industry will see this parable the way Bronfman apparently does: If you can move prices up early in the digital adoption cycle, you’re much better off.”
Full article here.
I’m curious, has anybody seen these mythical 69-cent songs in iTunes?
Greedy that’s what I call it. I refuse to pay more than 99p full stop
iTunes Canada still has the best pricing after the dollar conversion. As of today, 99 cents Canadian is about 93 cents US.
Evidently, If you make a decision and screw up, its best to blame someone else or the situation. Never admit you screwed up!
Is this what they teach in management schools?
The music labels have no clue. The days were people had to buy a album with 13 filler songs and 2 hits are long gone. Now, you guys have to actually work at producing a great album.
surprise… surprise….- NOT.
Vote with your wallet and tell them where to put it. Enough down pressure will make them lower the price and see that Jobs was right on the money with 99ç.
“Warner CEO Edgar Bronfman Jr. argued that the pricing change has been a ‘net positive’ for Warner”
I am always amazed that business people are so incredibly short sighted.
Until digital sales of music are > 60% or so of all music sales, you have to price them to sell more units and grow that method. Once you have them trapped in that model, then increase prices.
“Which lesson do you learn from this?”
Which lesson?!?!?! There’s only one lesson – higher prices = slower sales. Bronfman’s spin is not a lesson, it’s denial and stupidity.
I used to buy about 5 songs a month at 99¢ each.
Now that they cost $1.29 I buy about 1 song every 2 months. In my case it has nothing to do with the recession, just the pricing.
Maybe higher prices yeah, and just how freaking many Beyoncé songs can anyone buy?
Crap gets old after a while.
Not to mention with free services like Pandora the concept or purchasing music has become a quaint anachronism.
And (no matter what anyone says) double digit unemployment is not good for music sales.
‘Scuse me, Lucy. Anyone here know there’s a recession going on – probably a double-dip one!?!
Naboobs and naysayers. Gasp!
This is just another example of the same ol retarded republican greedy thinking that messes up a good thing
It should be also be noted that the music industry has multiple opportunities to add to their bottom line — their called concerts and road shows.
Where as a writer has only a single shot at the pie — when said writer sales a copy of his book.
Just a through…
“Vote with your wallet and tell them where to put it. Enough down pressure will make them lower the price and see that Jobs was right on the money with 99ç.”
Well no. History has shown that the music industry is incapable of lowering prices once they’ve been raised, even when it’s detrimental to sales. They will look around, blame everyone and everything else and raise prices to make up the loses. When that doesn’t work, maybe a fresh round of suing your customers and new government regulations will help. And of course, there’s always the fallback of getting some sort of tax on media to subsidize the industry, ‘cuz, you know, our customers are all crooks.
There are a lot of sub 69¢ tunes on iTunes if you buy the whole collection and the whole collection is out of copywrite protection. Music from the 40s, 50s and early sixties is as cheap as 15¢ or less a tune.
Of course, you have to be at least 10 years older than the music to really appreciate it.
OK, music/ movie/ book execs…. math problem. What would you rather have… 3 billion sales at 99 cents or 1 billion at $1.29? hmmmm….
It was all about the pricing for me $0.99 was perfect. $1.29 I have to think twice about buying newer songs asking if it’s worth it.
Maybe for the iPad, Publishers will learn the lesson and show some insight by not repeating the Music Label’s stupidity of trying to kill the goose that lays the golden eggs…
Weird. All the songs I’ve bought lately are still 99c. I must not be hip enough to like the “hot” stuff.
The thing about the 99c price vs. the $1.29 price is that 99c is below the psychological impulse barrier, while $1.29 is not. An amount less than a dollar is easy to throw away on something perceived to be “small”, like a 3-5 minute song. At $1.29, you may think about it for a few moments. (Mind you, I don’t have a problem with $1.29 personally. When you factor in the inflation since the iTunes Store was launched, it’s not as big an increase as it looks.)
A book is not usually an impulse purchase, at least not as impulsive as buying a single song. (I’m talking about real books, not the tiny paperbacks full of insipid homilies they sell near the cash register.) So it’s not as important to keep the price under some kind of psychological barrier. This is my long-winded way of getting around to saying that $12.99-$14.99 price predicted for iBooks is unlikely to be a problem as far as sales are concerned.
But as others have said, the market will decide.
——RM
The book publishers won’t “get it” either.
Nobody in content (video, music, print) understands what he heck they should do in the digital age.
The worst, though, is TV/Movie industry. They are so slow and blind and loaded to the gills with cash that they’re hopeless to adapt.
I know I’ve slowed my purchasing. You do notice a 30% increase when you buy in volume month to month. I’m now content just to listen to Pandora in the car and if there is something I must have, I buy the CD first week (which has been cheaper than the digital pricing and that makes no sense to me) and rip it.
Damned labels are just too greedy.
@ Gabriel
I have seen some 69 cent songs. “The Best of Badfinger, Vol. 2” has two!
Sell Lossless.
I found one!!!
by Ella Fitzgerald – track 5
http://itunes.apple.com/us/album/ella-fitzgerald-the-best-songbooks/id374485
http://itunes.apple.com/us/album/the-lady-is-tramp-1956-version/id374485?i=374457
@ Mr. Reeee,
256 kbps is lossless, unless you have canine DNA.
$.99 is my limit for an individual song unless it’s a superfantastic song. I haven’t found many superfantastic single songs in quite a while. Songs that great tend to come from great albums. Great albums I’d rather purchase on CD.
Since the RIAA started their threaten/sue-fest of fans, my CD purchases have plummeted. I don’t think I bought even 10 CDs last year. There are only certain musicians that I trust to offer up a full album’s worth of good work anymore, and those tend to be the only ones I buy without previewing the entire album. They are few.