It’s not secret that the record labels have long been upset with Apple’s insistence on pricing songs at $0.99 across the board; Apple’s massive market share meant that this was basically the market price, despite the DRM factor limiting purchases to Apple iPods. Now details are emerging that the latest changes to Apple’s music pricing structure seem to be motivated by better pleasing the music companies, who, rather than attempt to create a competitive service have ceded the market to Apple even further by allowing them to remove copy protection in exchange for hiking the prices on popular songs.
The $1.29 price tag will now be for popular, new music, which ostensibly makes up the bulk of sales. Long tail content will drop to $0.69, while the traditional $0.99 price tag will be for moderately popular songs.
It’s interesting to note that, while the long tail is supposedly the bigger area of sales, according to the Long Tail theory, in this case, the labels and Apple were willing to drop the price and focus on the more popular music. This would seem to indicate a more traditional 80/20 breakdown of sales, with 80 percent of sales going to only 20% of total inventory.
It will also be interesting to see how this affects Amazon’s fledgling MP3 download service. Amazon’s main value point was that their music could be downloaded and played anywhere, as it was DRM-free. Without a snazzy device like the iPod, or an online store integrated closely with mobile devices, such as iTunes, Amazon had trouble gaining traction, and despite doing very well in digital sales, did not put a dent in iTunes’ dominance of the market.