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Music-download pricing drifts away comfort zone

9 Apr 2009

Consumers have come to accept that songs can be purchased à la carte for 99 US cents via the internet. That is a result, of course, of Apple's revolutionary introduction of the iPod music player and the iTunes music store several years ago. Before then, consumers had few options for downloading music onto digital music players - and most of them were illegal.

Now, it appears that Apple - not to mention the music studios - wants to change the parameters of the game again, by introducing new price points for songs. At the same time, its closest rival, Amazon, is swooping in with its own new price points, which in many cases undercut Apple's.

Whichever model turns out to be the winning one will depend on a few factors. Namely, can consumers be convinced to pay more than 99 cents a song? Is improved sound quality a good enough reason to lure reluctant consumers to pay more? Just how devoted are Apple fans to the iPod-iTunes ecosystem?

There are currently no clear cut answers to these questions, which means that these changes are likely to usher in a new era of price competition as online music companies experiment to see how customers respond.

"I think this is going to set off to a far greater degree than the industry has seen thus far competition among internet music providers," Fred Koenigsberg, partner at White & Case, told the E-Commerce Times.

Besides the variety of vendors, new competition - especially if it winds up boosting prices overall - could finally make popular the subscription-based online music model, Koenigsberg suggested.

"If I knew how this would all sort out, I would be a rich guy," he quipped.

Read the full article here.