Apple Revamps iTunes
Tiered pricing seeks to prop up sales.
With online-sales growth slipping, the music industry is being forced to stay dynamic in a space it was reluctant to enter in the first place. Yesterday, Apple (AAPL) -- the world's leading music retailer -- announced that it would adopt a new 3-tier pricing structure for iTunes.
According to the Wall Street Journal, songs will now cost $0.69, $0.99 or $1.29, with the most actively downloaded songs landing in the highest price bucket as Apple tries to prop up revenues in a tough economic environment.
Nevertheless, the Apple said the changes will be "great for customers."
In addition, the House of Jobs also plans to relax copy restrictions on music downloads. So-called digital-rights management, or DRM, restricts customers from copying and sharing songs at will, making iTunes purchases tough to play on competing music devices. By dropping its strict limitations, Apple is trying to compete with rivals like Amazon (AMZN), which allows customers to copy songs as many times as they like.
Apple will charge customers who purchased songs prior to the switch $0.30 to upgrade to the new, more shareable version of their favorite tune.
Apple, along with competitors like Wal-Mart (WMT), is searching for ways to maintain high sales volume even as their customers struggle to make ends meet. Tight credit markets and drastically weakening employment conditions are forcing consumers to cut back on non-essential purchases (like ZZ Top's entire back catalogue, for example).
The shift in pricing strategy mirrors broader changes in retail, as consumers find themselves lured by flashy sales and big discounts. Once inside, however, they're often disappointed to find that the things they actually want still cost just as much as they did before.
Apple's reliance on having the simplest, coolest music platform simply won't cut it in an environment where consumers are becoming increasingly discriminating with their discretionary dollars. And as its competitors begin to catch up in the world of portable music, the company will be forced to keep innovating - or risk losing the edge it worked so hard to secure.
The information on this website solely reflects the analysis of or opin=
=3D =3D3D ion about the performance of securities and financial markets by =
the wr=3D iter=3D3D s whose articles appear on the site. The views expresse=
d by the wri=3D ters are=3D3D not necessarily the views of Minyanville Medi=
a, Inc. or members=3D of its man=3D3D agement. Nothing contained on the web=
site is intended to con=3D stitute a recom=3D3D mendation or advice address=
ed to an individual investor =3D or category of inve=3D3D stors to purchase=
, sell or hold any security, or to =3D take any action with re=3D3D spect t=
o the prospective movement of the securit=3D ies markets or to solicit t=3D=
3D he purchase or sale of any security. Any inv=3D estment decisions must b=
e made =3D3D by the reader either individually or in =3D consultation with =
his or her invest=3D3D ment professional. Minyanville write=3D rs and staff=
may trade or hold position=3D3D s in securities that are discuss=3D ed in =
articles appearing on the website. Wr=3D3D iters of articles are requir=3D =
ed to disclose whether they have a position in =3D3D any stock or fund disc=
us=3D sed in an article, but are not permitted to disclos=3D3D e the size o=
r direct=3D ion of the position. Nothing on this website is intende=3D3D d =
to solicit bus=3D iness of any kind for a writer's business or fund. Mi=
ny=3D3D anville mana=3D gement and staff as well as contributing writers wi=
ll not respo=3D3D nd to em=3D ails or other communications requesting inves=
Copyright 2011 Minyanville Media, Inc. All Rights Reserved.
Daily Recap Newsletter