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iTunes songs to stay at 99 cents
Apple says it has renewed its contract with the four major record labels but didn't budge on its flat per-song pricing, a big win for the House of Jobs.
To the delight of the iTunes/iPod juggernaut and the dismay of the major record labels, Apple and the four majors renewed their contract and songs will remain 99 cents within the dominant digital download store.
Apple said yesterday that it renewed its contract with label giants Universal Music, Sony BMG, EMI, and Warner Music for iTunes to sell music at the flat rate of 99 cents per song.
The subject of variable pricing--allowing labels to set prices higher or lower that the 99-cent standard based on a song's popularity and other characteristics--had been a sticking point for quite some time between Apple chief Steve Jobs and the major record labels.
Last October, Jobs publicly labeled the labels "greedy" for wanting variable pricing, while Warner Music chief Edgar Bronfman retorted later that "there's no content that I know of that does not have variable pricing. Not all songs are created equal--not all time periods are created equal. We want, and will insist upon having, variable pricing."
But the labels had little leverage over Apple's iTunes, by far the dominant digital store with more than 70 percent market share. iTunes accounts for about 80 percent of the US digital music market, and the labels are desperately hoping that digital sales can help make up for the decline of CD sales. In 2005, digital sales accounted for 6 percent of all music sales.
"The labels need Apple too much right now," one record executive told the Financial Times.
The paper reported that some record executives had speculated that the big labels might sign short-term contracts with Apple and revisit the issue later, but that does not seem to be the case. The companies were also discussing issues such as antipiracy controls and the possibility of greater interoperability between iTunes and other download services.
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