Why music labels want to force multiple price points on Apple’s iTunes Music Store

“‘EMI Group boss Alain Levy said at press conference today that he believed Jobs would introduce multiple price points for iTunes music within the next year,’ Forbes recently reported. The story they’re trying to tell you is that ‘older, less popular songs could be discounted, and in-demand singles could go for more than a dollar.’ Let’s think this through, because I think the recording industry is lying about why they want different prices,” Joel Spolsky writes for Joel on Software.

“The reason the music recording industry wants different prices has nothing to do with making a premium on the best songs. What they really want is a system they can manipulate to send signals about what songs are worth, and thus what songs you should buy. I assure you that when really bad songs come out, as long as they’re new and the recording industry wants to promote those songs, they’ll charge the full $2.49 or whatever it is to send a fake signal that the songs are better than they really are. It’s the same reason we’ve had to put up with crappy radio for the last few decades: the music industry promotes what they want to promote, whether it’s good or bad, and the main reason they want to promote something is because that’s a bargaining chip they can use in their negotiations with artists,” Spolsky writes.

“Here’s the dream world for the EMI Group, Sony/BMG, etc.: there are two prices for songs on iTunes, say, $2.49 and $0.99. All the new releases come out at $2.49. Some classic rock (Sweet Home Alabama) is at $2.49. Unwanted, old, crap, like, say, Brandy (You’re A Fine Girl) — the crap we only know because it was pushed on us in the 70s by paid-off disk jockeys — would be deliberately priced at $0.99 to send a clear message that $0.99 = crap,” Spolsky writes. “And now when a musician gets uppity, all the recording industry has to do is threaten to release their next single straight into the $0.99 category, which will kill it dead no matter how good it is. And suddenly the music industry has a lot more leverage over their artists in negotiations: the kind of leverage they are used to having. Their favorite kind of leverage. The ‘we won’t promote your music if you don’t let us put rootkits on your CDs’ kind of leverage.”

Full article here.

Advertisements: The New iPod with Video.  The ultimate music + video experience on the go.  From $299.  Free shipping.
Connect iPod to your television set with the iPod AV Cable. Just $19.00.

Related articles:
Will Apple’s iTunes Music Store be forced to raise prices by greedy music labels? – November 17, 2005
EMI chief: Apple’s Steve Jobs may alter iTunes pricing model within the next 12 months [UPDATED] – November 16, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels – September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels – September 22, 2005
Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004


  1. Well, in a way I would be happy to see this. Most of the stuff I buy on iTunes are individual old songs I don’t own in any other format and wouldn’t want to buy the whole album of. My cart has hundreds of songs in it so I can wait for them to come down.

  2. Pricing sends a signal? This must the lamest theory yet of why the music labels want to control the marketplace themselves and reap more profits.

    How’s this for a signal: Apple has a pure moneymaker here and the labels are powerless to muck it up. They could walk away, but it would be walking away from serious profits and chart sales.

    Marketing is the way that people get the idea what is supposed to be big, just like the Movie business — one ticket price for all movies.

    I mean, who gives a shiite if they want to highlight newer titles with higher prices? Good for them! But if the consumers are grabbing older titles for the same money, or other bands are catching on greater than other bands — maybe the consumer will actually be more content and happy and the music industry will dominate again.

  3. Don’t really agree with this theory. I do agree with the idea that they want to charge as much as someone will pay, which will not happen in the $0.99 model.

    I also suspect that this signal a gradual shift upward in the median price. It only makes sense that if things are priced according to demand, with the most popular at $3 (OH, sorry, I meant $2.99…) and the least at $0.99, then things of average popularity, of which there are the most, will be at $2..no, wait! $1.99! Therefore, it won’t just affect the Britneys and other pop songs, but will end up jacking up the prices of most titles.

  4. If they actually get a scheme in place that charges 2.50 for new songs, the quality of which is *worse* than a CD, then they’ll drive iTunes out of business. It’s already about the same to buy an album off of iTunes as it is to buy a CD, and the quality is so much better on the CD that for me, at least, it makes iTunes a hard sell right now. Raise the price on some songs, and forget it.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.