Apple Renews 99 Cent Download Contracts
Apple Computer acknowledged it had renewed contracts with the four major labels to continue to sell songs through its iTunes digital store for 99 cents each. The agreements came after months of bargaining, and were a defeat for music companies who had been pushing publically and privately for a scaled pricing model.
Since iTunes inception, Apple has charged US consumers 99 cents for each downloaded track. Although the majors have instilled provisions in their contracts to sell popular singles as an “Album Only” sale, case in point Sia’s Breath Me from the Six Feet Under Soundtrack, the dollar price point is something that Apple CEO Steve Jobs has insisted is the magic number. Jobs feels any price increase is just the labels being “greedy” and will ultimately push consumers away from iTunes to the illegal Peer-To-Peer (P2P) Services.
Warnerâ€™s CEO, Edgar Bronfman, and senior executives at EMI and Sony have in recent months supported variable pricing, which would allow them to charge more for new material from top artists. Universal has taken a more modest approach, suggesting that the market should be allowed to develop further before any adjustments are made. However, several music executives privately acknowledge that they have little leverage over Apple.
iTunes accounts for about 80 per cent of the US digital music market at a time when the record companies are desperate to show shareholders they are replacing declining compact disc sales with new internet revenues. The surge underlines the competing priorities for Apple and the music industry. While the record companies are seeking new ways to generate revenues, Apple generates the bulk of its music-related revenues from sales of iPod players.