Shocking! Repetitive! Higher iTunes Music Prices Slowed Sales
When iTunes Music went DRM-free and “hits” jumped from $0.99 to $1.29 stories soon followed that the higher price point was leading to slower sales… and now that iBooks and publishers aim to increase eBook sales from $9.99 to up to $14.99, MediaMemo is telling them to “beware!”:
Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple’s (AAPL) iTunes decelerate since the price increase: Industrywide, year-over-year “digital track equivalent album unit growth” was at five percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.
If people have to spend more they’ll buy less? And if they think the price is unreasonably high they’ll buy less still? Shocked. Shocked are we!
The thing is this — under the new 70/30 agency model, publishers can charge what they like. If nobody buys a new bestseller at $14.99 but they do at $12.99, publishers can set that price on iBooks and still get their 70%. They can go back to $9.99 if they want to. Same with music.
Way back when iTunes Store launched, Steve Jobs made it a point to say their competition wasn’t physical media — it was free pirated media. There’s a price point where users will feel it’s cheap enough they don’t even want to bother with the steps involved in pirating eBooks or MP3s, they’ll just click the Buy Now button and thank Apple for the convenience.
That’s the real model.
February 9th, 2010 at 3:51 pm
Why buy overpriced milk when you can pirate the cow for free?
I’m certainly not paying for overpriced stuff and if it is cheap why pirate it? It’s cheap and won’t even dent your wallet. I don’t see why I have to buy music when I hear it on the radio all the time. That’s worth the money
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February 9th, 2010 at 4:01 pm
The 70/30 model itself has nothing to do with publishers being able to reset prices. In the old model, if a book was not selling at $14.99, the publisher could drop the price to $9.99, as well.
But — and this is where it is different — in the old model, the store could also change the end user price. If they bought the book at $14.99 from the publisher, they could drop the price to $9.99 for resale, as a loss leader, to clear inventory, or for whatever reason they felt appropriate. In the new agency model, this is no longer possible.
February 9th, 2010 at 4:10 pm
The music industry got what they wanted. I am not shocked nor do I care. I still buy CDs and rip them at a quality of my choosing all for the same price of an inferior download. The RIAA will have to fall flat on their face before they learn anything and even then maybe not. Add to that, most of the music being pushed is garbage on top of low quality downloads. Of course people are going to buy less what did they thing was going to happen.
February 9th, 2010 at 4:36 pm
I still don’t understand why someone would pay the same price for an MP3 album as a store bought one.
February 9th, 2010 at 6:25 pm
when the price if iTunes music went up to 1.29 I stopped buying music from there
February 9th, 2010 at 6:49 pm
I was so upset when iTunes raised it’s .99cent music price. I too stopped purchasing music from iTunes at that point just out of spite.
February 9th, 2010 at 8:24 pm
Simple economic…raise the price and no one will buy it from music to ebooks.
February 9th, 2010 at 9:37 pm
I KNOW I JUST HATE WHEN SONGS ARE 1.29 LESS MUSIC FOR ME.15$ iTunes Card I just get 10 Songs so hate the iTunes store now…
February 9th, 2010 at 10:16 pm
Lmfao @ G33K. How does one pirate a cow?
February 10th, 2010 at 1:33 am
I get disgusted when I see a song on iTunes that I’m thinking of buying with that ridiculous $1.29 price tag when it’s $0.99 most of the time at amazon. I’d prefer buying it from iTunes but f**k that 30 xtra cents so I go elsewhere.
February 10th, 2010 at 2:10 am
why hasn’t Apple or Amazon come up with a different pricing model for full-quality (FLAC) album distribution?
regardless of DRM, a 256 CBR mp3 or AAC just isn’t good enough quality for me to purchase
until then, i’ll continue to file-share (”pirate”) and support artists by buying concert tickets and merchandise from them at shows.
why not just give us what we want?
February 10th, 2010 at 4:34 am
I’ve avoided the “hit” pricing, which is $2.19/track in my country. It just seems wrong
February 10th, 2010 at 8:43 am
I would like to find some 69 cent music on iTunes on older mainstream material. I haven’t yet.
February 10th, 2010 at 2:03 pm
I’m with y’all on this one. I refuse to buy from itunes now, even if the song is only .99 cents. The music industry promised that songs would be priced at .69 cents to compensate for the price raise on mainstream music but I’ve yet to see at .69 cent song..even old 80’s hits.
February 10th, 2010 at 2:12 pm
Great advice, showing maturity in your response. I need some time to think about this
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February 10th, 2010 at 2:29 pm
Looks like a unanimous view on here which is rare. The hit pricing was a bad move and is off-putting to me. Meanwhile the discount prices are only used by the labels for the real dross no-one wants. I just use the low price to identify the old / bad tracks not worth buying! I think most of the labels have missed the whole point of flexible pricing. It was much better when there was a flat rate for all.
February 10th, 2010 at 2:47 pm
Very interesting idea, here we learn about very well features. Thanks
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February 11th, 2010 at 5:21 pm
The new pricing scheme is ridiculous. I have NEVER seen a $0.69 track. Perhaps I’m not looking hard enough, but it’s MORE than easy to find even not-so-mainstream songs going for $1.29. If I’m really interested in a song and it’s $1.29 on iTunes, I see if the website I go to offers it for free. Otherwise I go to Amazon. Bring back flat pricing…and drop it below $0.99 a song. THEN I’ll buy.