Peter Kafka

Recent Posts by Peter Kafka

Now Available at iTunes: Price Hikes for Music

itunes-logoApple has finally rolled out the “flexible pricing” plan it announced earlier this year at its music store. If you’re a casual music consumer and that phrase doesn’t mean anything to you, let me rephrase it: Many of your favorite songs will now cost 30 percent more at iTunes.

In theory, the new pricing scheme Apple (AAPL) struck with the big music labels swaps out the old deal–99 cents a song–with three new tiers: 69 cents, 99 cents and $1.29 a song. But based on the (admittedly) cursory check I just conducted, finding a song priced below 99 cents will be very, very rare. In fact, I have yet to find one.

I did find plenty of music priced at $1.29, though. Six of Apple’s Top 10 songs are now at the new tier, which means that if you want buy “Boom Boom Pow” by the Black Eyed Peas (really?), you’re going to have pay up.

That’s pretty much as expected. The labels–that’s Warner Music Group (WMG), EMI Music Group, Sony (SNE) and Vivendi’s Universal Music Group–have always argued that hot new singles should cost more than not-hot new singles, because…. well, actually the logic there that gets a little fuzzy.

But whatever: If the labels can get away with charging more per song, more power to them.

But I don’t understand why they wouldn’t make a point of aggressively discounting some of their older catalog stuff at the same time. Online music sellers have found, via repeated experiments, that consumers are price-sensitive and that if you charge less, they’ll buy more. And last time I checked–and every time I’ve checked for the last decade or so–the labels needed to sell a lot more music, not less. Right?


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