iTunes Tiered Pricing is Right Move

Apple made two noteworthy announcements in conjunction with the annual Macworld event this week. First, Apple is dropping Digital Rights Management from the library of songs on iTunes. This move will enable easier song sharing, which you can view either as piracy or creating more exposure. Second, tracks sold on iTunes will now be priced using a three price points: .69, .99. and 1.29. This change is a significant departure from the flat rate price of .99 that iTunes has had since its inception.

The time is right for both moves, especially the tiered pricing system. Setting prices for all tracks at .99 in the beginning was instrumental in gaining consumer acceptance of paying for music by the song. The three-tiered system acknowledges different values for different songs. If you are looking to add an obscure disco song from the late 1970s, it should cost less than a top hit from today. Now that Apple dominates the music download market, it has the leeway to institute tiered pricing. The change in strategy returns some pricing power back to the music companies, who have fought hard for having a voice in how their products are priced.

Link: Fast Company Technomix Blog - "Apple iTunes Dropes DRM, Adds Tiered Pricing, 3G Downloads"

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