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iTunes Tiered Pricing Now Official

As announced in January, and forecast a little more than a week ago, Apple officially made the switch from 99 cent songs to tiered pricing on iTunes today.  

For the better part of six years, Apple’s had resisted record label pressure to make the shift.  Steve Jobs argued the pricing needed to be “fair” to offset the temptation of downloading a pirated song.  Raising prices too high, he said, would drive customers away.  99 cents was simple, and sufficient.

Apple backtracked and conceded in a Macworld announcement, but only after the record companies agreed to remove Digital Rights Management restrictions (DRM) from the music in the catalog, and to allow Apple to sell songs wirelessly over 3G in exchange.

Under the new arrangement, the music store is now entirely composed of DRM-Free, 256kbps songs priced at 69¢, 99¢, and $1.29.  (Upgrading previously purchased songs to the higher bit rate, and encryption free format can be done for 30¢ a track).

The record labels are responsible for determining the pricing distribution (e.g. which songs sell for which price).

To try and get a sense of how that distribution looks at launch, and also gauge how it stacks up against the market, we browsed iTunes and then compared song prices at both iTunes and Amazon’s Mp3 download store.   The result – the song’s not the same.  Depending on which store you explore, the very same tune from the very same album can be found for sale at two different price points.

Looking at the top hundred songs from both sites:    All iTunes songs were priced at either 99cents or $1.29.  The majority, 59 out of the 100, were at the mid tier price of 99cents.  Amazon’s store, in contrast, slotted 83 at the mid tier.  Another 8 songs in Amazon’s top hundred were economy priced at 79 or 89 cents.  9 (to Apple’s 41) were at a premium of $1.29.

Amazon’s advantage on hot new hits notwithstanding, iTunes wasn’t without a few bargains of its own.  It took some digging but we found a number of songs, mostly older classics, that were 30 cents cheaper. Among others, the quick survey turned up Bruce Springstreen’s “Cover Me”, the Clash’s “London Calling” and Marvin Gaye’s “Can I get a Witness” all set at 69 cents a song.

Now is 30 cents really enough of a difference to drive a customer from one store to another? … or to motivate someone to dig around for a bargain? Guess that depends on how much music you buy but whatever the case, DRM-Free iTunes is a positive improvement for all.

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