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iTunes Staying at 99¢

April 23rd, 2006

Who knows what Steve Jobs said or did, but for the time being, it looks like he convinced the major U.S. music labels (if not the Japanese ones previously) to stay with the universal 99¢ pricing system for iTunes. How Jobs did this is not clear, because it seemed that the labels were pretty serious about this, and some even threatened pulling their content from the iTMS if Jobs did not acquiesce. These are companies that consider themselves to be very powerful, and are used to getting their way; that Jobs was able to stare them down speaks to just how powerful Apple has become in this business, not to mention how important online paid downloads have become for the music industry. The iTMS has sold more than a billion songs so far, and has almost as complete a lock on the market as Microsoft has on the OS.

The labels wanted to change the pricing so that older songs would cost 60¢ to 80¢, while newer songs would be priced “more aggressively”–in other words, whatever the market could bear. They claimed that this was being done not for themselves of course, but instead for the artists and the consumers. Complete bull, of course–the labels have always ripped off both the artists and the consumers, the artists by making them sign usurious contracts that give them very little of the profits from their work, and the consumers by charging outrageously inflated prices.

Some suggest that Jobs wants the prices kept down so he can sell more iPods, but really this is closely connected to the sale of songs; Jobs makes money off of iPods if more songs are sold, and he’d make less money if the songs were priced too high. But then again, so would the labels. The disagreement is not over who makes money, it’s over who’s right about which business model will make more money for everybody.

[Editor’s note: sorry this was published late–I finished it last night but there’s a problem with my blog publishing software that I have yet to fully resolve.]

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