iTunes Price Hikes Treating the Industry Just Fine

By  |  Wednesday, April 15, 2009 at 5:42 pm

ituneslogoIf you thought the recording industry would suffer for pushing higher prices on iTunes and other download services, you’d be wrong.

Billboard reports weaker sales for iTunes tracks whose price changed from 99 cents to $1.29 a week ago, but overall revenues for the Top 100 still rose by roughly 10 percent.

iTunes adopted a “variable pricing” structure on April 7 as part of a new agreement with record labels. While most tracks still cost 99 cents, some popular songs became 30 cents more expensive, while a selection of random classics were priced at 69 cents. Forget about storming off to another service; Amazon, Napster, Lala, Rhapsody and Wal-Mart. The deal also marked the end of Digital Rights Management on iTunes tracks.

Looking at some of the $1.29 tracks whose sales were holding steady in the weeks before variable pricing, you can get a pretty clear picture of the effects. Sales of “Beautiful” by Akon dropped from 57,941 last week to 52,760 this week. That means the song generated an additional $10,699 at the new price level. The less-popular “Stanky Legg” (what?) by GS Boyz slipped by 2,994 in sales but still earned an extra $2943.54.

Missing from Billboard’s report are statistics on the songs whose price decreased. Along with the costlier tracks, iTunes launched two compilations — Rock and Classic R&B — at 69 cents per song. I have a feeling revenue increased for those songs, simply because they were lifted from obscurity and offered on sale.

All of this makes me wonder whether the recording industry will try to push prices even higher in the future. Thus far, the “voting with your wallet” concept hasn’t worked, so what’s the threshold at which consumers will resist? $1.50 per song? How about $2?



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