Record Labels Winners In Apple, Amazon Price War - InformationWeek

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Record Labels Winners In Apple, Amazon Price War

While tiered pricing will become the norm among online stores, consumers shouldn't expect consistency.

With Apple's recent launch of tiered pricing on its iTunes Music Store, the major record labels have succeeded in being able to charge music fans more for the songs they like the most.

Apple, the largest music retailer in the United States, had refused to budge from its 99-cent pricing for all songs, old and new, despite pressure from record labels. As of Tuesday, that changed with Apple selling songs for 69 cents, 99 cents, or $1.29. In general, the more popular the song is, the higher the price.

As a result of Apple's move, consumers can expect to see similar pricing across all music stores over time. La La Media, which sells tunes and also offers streaming music over the Web, called the change an "industry shift."

"You will see much more variable pricing by all music retailers, with the price moving higher on some tracks and lower on others," the company said in its blog.

Gone will be the 89 cents or 99 cents online shoppers paid for the majority of MP3 downloads. While Apple stuck with the latter price across the board, competitor would often charge the lower price to entice buyers, and Wal-Mart, in keeping with its reputation as the "low-price leader," would often go a few cents less.

The major record labels, Warner Music Group, EMI, Sony Music, Universal Music Group, and Disney, were able to get what they wanted by letting Apple competitors sell music without digital rights management, a copyright protection technology that many consumers found too restrictive, Sonal Gandhi, analyst for Forrester Research said. This placed pressure on Apple, which feared it could start to lose market share if DRM-free songs grew popular in the mainstream market.

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