As Rumored, Apple Gives Record Labels Variable iTunes Pricing In Exchange For Ditching DRM

from the it's-something dept

As was rumored last night by Greg Sandoval at, it appears that Apple has worked out a deal with the major record labels (being confirmed as I type) where they will give up DRM (which is the direction they've been moving towards anyway) in exchange for variable pricing of music -- which they've been salivating over for years. This has been a major source of contention between Apple and the record labels. Steve Jobs has stood firmly by the $0.99/song price, while the record labels specifically wanted to be able to price hit songs at higher prices. The dropping of DRM is nice, but hardly that surprising, given that pretty much every other online download store has been going DRM free. This just puts the final nail in the coffin for music DRM. One nice tidbit: you'll apparently be able to upgrade your older DRM'd purchases to make them DRM free. That's a good (and slightly surprising) move.

As for the pricing, there's now three tiers: $0.69, $0.99 and $1.29. Hit new songs will go for the higher price while older, less popular songs will have their prices drop. The announcement isn't that surprising, but it is definitely a shift. What will be worth watching is how this impacts sales. It really may depend on how the record industry plays this. If (as seems likely) they put too many songs in that high priced level, it's going to lead to backlash. However, if they really embrace that lower price, it could encourage more folks to download music. I also wonder if it will push competing music download stores, such as to lower its prices even further as well.

While this definitely is a shift from the way iTunes has always worked, in the end, it's really not a huge shift. The industry was moving in this direction anyway, and killing off DRM was long overdue. The variable pricing is the type of thing that the big record labels will likely screw up, but in the long run is probably a good thing. The $0.99 per song fee has always been too high, and accepting variable pricing will eventually lead to those prices decreasing (not increasing, as the industry expects).

Filed Under: drm, itunes, variable pricing
Companies: apple

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  1. identicon
    qez, 7 Jan 2009 @ 9:17am


    What? I thought Mike's position on this was clear: Keep the infinite good, which is the music, free, which in other words means don't try to make money from sales of the infinite good. He wants everything that is infinite to be free, be it music, literature, movies, newspapers.

    He has never said that make money only from scarce goods. Some of us are willing to pay for the infinite goods as well. But if you let the infinite to be free you will increase the market for the scarce good.

    But Apple just destroyed that theory....I'd like to know how does that fit in with Mike's Grand Unified Theory of Free.

    The theory you mentioned is about how content creators should set free their content. Apple is not content creator and it doesn't sell its own content. So Apple hasn't destroyed any theory.

    And they seem to have no problems paying for musivc, unlike Mike and his fanboys.

    Show me where Mike has said that nobody should pay for music? Or that is somehow wrong to pay for it?

    Reznor's own example disproves that statement. The economic reality has already forced him to gove away his music, but that has not changed anything for, in this case, Amazon, which seems to have raked in the money from sales of those very MP3s he gave away for free.

    You take Reznor as an example that Mike is wrong? :D Dude, Reznor is proving Mike's point.

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