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Summary:

It was a sad day this past Tuesday for almost everyone except the record labels when Apple put in place the variable pricing scheme they’ve been promising since announcing their entire library would be going DRM-free. At the very least, many thought they could take refuge […]

amazonwalmartmp3It was a sad day this past Tuesday for almost everyone except the record labels when Apple put in place the variable pricing scheme they’ve been promising since announcing their entire library would be going DRM-free. At the very least, many thought they could take refuge in the safety and comfort of iTunes rivals Amazon and Wal-Mart, both of whom also run digital music sales outlets, and both of whom had suddenly become a much better value proposition in the face of the changes.

Sadly, no e-tailer turned out to be safe. Both Amazon and Wal-Mart introduced their own variable pricing schemes shortly after Apple’s went live. This was literally hours after a friend recommended switching to Amazon, since it now presented a better deal. Amazon is now offering some of its best-selling tracks at $1.29, and some at the low end for 79 cents, while the overwhelming bulk of their catalog still goes for 99 cents. True to their lowest price guarantee, Wal-Mart’s standard price point is 94 cents, with some top sellers now going for $1.24, and a few bargains at 64 cents.

The changes across the board signal an industry-wide trend, and show that Apple was not alone in negotiating a new pricing arrangement with the record labels. It’s especially noteworthy that the same tracks don’t necessarily cost the same in each store, with Apple having more songs in the top-tiered price range than either of the other two.

Both Wal-Mart and Amazon had already been selling music DRM-free, suggesting that the recording industry’s goal with dangling the DRM-free carrot in front of Apple was to pave the way for price hikes across the board. Now that that barrier is gone, expect to see digital music prices creep to the point where they more closely resemble what you’d pay at brick-and-mortar stores.

  1. [...] Staff | Thursday, April 9, 2009 | 9:31 AM PT | 0 comments Amazon, Wal-Mart follow Apple’s lead with variable pricing (TheAppleBlog) Why rumors of an e-book reader from Barnes & Noble make sense (jkOnTheRun) [...]

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  2. There is still one downward pressure on the prices: piracy. When iTunes, followed by the others, started offering reasonably priced downloads, the consumer had a choice of dealing with P2P, which frequently returned corrupted files, a risk of prosecution, and a real time suck looking for the right file, compared to the much more streamlined experience offered in legal channels. It wasn’t just that people wanted to be ethical, Apple et al. were also selling an improved UX.

    If prices do creep back up to the point where the cost of a single track is significant, a lot of people who did cost/benefit analyses and decided it was worth their money to have the more pleasant experience of a legal download will do those analyses again, and this time, their judgment may once again be to the labels’ and retailers’ detriment.

    I’m not advocating the use of piracy, just pointing out that from a pragmatic level, it still represents a pressure on prices.

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  3. I’ve never pirated music and I don’t intend to start but I just refuse to purchase anything that would support these greedy bastards. I guess I could search for the cheap or .99 titles but at this point even those just feel like a rip-off. These price hikes across other retailers prove this was never about DRM. In my use DRM has never even been an issue. So the record companies have driven me away. Really, I hope these greedy, incompetent companies just die.

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  4. This is just greed. Here we are in a down economy and they are raising prices. This just blows my mind. I hope that they see a significant decrease in the number of downloads. I spend on average about 20 bucks a month on iTunes and I will not pay $1.29 for music. The variable pricing is a joke and my hunch is that the more popular a song becomes the chance of a price jump for it increases. Total clowns driving the car fueled by nothing more than greed.

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  5. Isn’t this Price Collusion? I hope somebody sues them and RIAA.

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  6. “Amazon, Wal-Mart Follow Apple’s Lead” is a totally misleading title. All three retails have the price of songs set by the major music labels.

    How can this NOT be collusion with all the labels banding together to raise prices at the same time?

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