iTunes’ Variable Pricing Launch: By The Numbers

Apr 7th, 2009 // 14 Comments

Apple’s iTunes Store launched its variable pricing for music today, where certain songs will have their prices pumped up by 30 cents to $1.29. (Other songs will have their prices slashed to 69 cents.) A glance at the store’s top 100 songs shows that about one-third of the best-selling tracks have had their prices inflated—a number that includes the store’s top two songs as of this writing, the Black Eyed Peas’ “Boom Boom Pow” and Lady GaGa’s “Poker Face.” I’ll be checking back during the day to see if the inflated prices of those two songs results in their floating down the chart (or if the still-99-cent levy one has to pay for “The Climb” helps it out at all), but for now, here are a few other factoids I noticed about Day One of Apple’s experiment with economic theory:

Percentage of the Top 10 that had its price inflated: 60% (Black Eyed Peas, “Boom Boom Pow”; Lady GaGa, “Poker Face”; Flo Rida, “Right Round”; Soulja Boy Tell ‘Em, “Kiss Me Thru The Phone”; All-American Rejects, “Gives You Hell”; Ciara feat. Justin Timberlake, “Love Sex Magic”)
Highest-ranking song that remained at 99 cents: Miley Cyrus, “The Climb” (No. 4 on the chart as of this writing)
Lowest-ranking song that had its price pushed up: The-Dream, “Rockin’ That Thang” (No. 91)
Percentage of the Bottom 10 that had its price inflated: 10% (The-Dream only)
Genre most likely to see a price increase: “Hip-Hop/Rap” (10 out of 20)
Genre least likely to see a price increase: “Soundtracks” (none), then “Alternative” (one out of eight)
Did any song in the top 100 get its price slashed? Ha. Ha. Hahahahahaha.
Number of $1.29 songs that are also available to be used as iPhone ringtones: Zero. A glitch in the system, or are the record companies still figuring out a way to charge a premium on top of a premium?

Top Songs [iTunes; launches iTunes application]

  1. Anonymous

    I haven’t found an 69 cent songs yet, and I was trying to look for random old crap. hmmmm

  2. Thierry

    Two thoughts:
    - if this is iTunes’ experiment with economic theory, then maybe they should go back to their textbooks: supply and demand as a determinant of prices only works when speaking of relatively scarce resources (demand drives price up because there is a limited supply), but here it makes no sense at all (unless you see music as a luxury good whose demand increases when its price increases)since downloads are not limited in any way by scarcity. In fact, most economists would probably predict that an increase in price here would simply drive down demand. The only possible justification for this from a business perspective is that they figured demand will not drop enough that the increase in price will mean a drop in overall revenue.
    - it would seem a bit risky for iTunes to increase the price of its most popular tracks, since buyers of pop music (especially teenagers) would seem to be the most likely to turn to illegal downloading, while people who buy so-called “alternative” are those who still seem to actually buy music in larger number, if we look at the inflated chart positions of indie releases over the last couple of years.

    In any case, I’m really curious to see how this will work out for Apple.

  3. The Illiterate

    It may also be an big boon for Amazon, who are still selling the top ten at .99

  4. Anonymous

    Overall it doesn’t look too bad, but seriously iTunes? $1.29 for moldy alternative rock staples like “Mr. Brightside’ and “The Reason”? I understand upping the price on current hits, but doing it for five year old songs that just won’t die? C’mon.

  5. Chris Molanphy

    Obviously in week one, the labels are going to jack virtually everything they can and see what happens to overall volume. If it’s down drastically over the next couple of weeks, you can bet there’ll be price cuts on certain newbie acts and other “priority” tracks (say, a current single by a superstar that needs to go to No. 1 or somebody loses his job).

  6. mackro

    I’m curious what the breakdown is in $1.29 songs between the Big Label tree, and the other labels. This wasn’t mentioned in the entry here, and I would assume it would weigh heavily on the former side for many reasons.

    But I wouldn’t be surprised if some indies decided to go with the $1.29 bait.

    Moreover, how many people have bought any iTunes Plus upgrades, full or partial? Because anyone who did essentially has already accepted the $1.29 standard by proxy before this recent change.

  7. mackro

    Also Devil’s Advocate: Lamenting the imminent loss of the Big Label tree of the music industry while decrying a 30 cent increase per song at the same time sounds somewhat hypocritical to me — only in that even people who buy large amounts of music, say two albums a week on average, would spend an extra $450 a year.

    For people who just buy hit singles, this would really be an extra $100 a year at most? I mean, many people’s power bill is going up that same amount per month.

    This is hardly a justification for the gross mismanagement of the big labels and their self attrition, but making an issue out of a 30 cent song increase, especially in a context that’s not as wasteful, seems a bit petty to me.

    Devil’s Advocate Close Tag.

  8. Maura Johnston

    @mackro: well, it wasn’t mentioned because there aren’t any songs in the top 100 that are on indies.

  9. Maura Johnston

    @mackro: and to play devil’s advocate to your devil’s advocate, many people are also losing their income entirely.

  10. Lampbane

    I don’t think it’s so much about the 30 cents as it is that they’re breaking a barrier – going above the dollar mark. When it was less than a dollar, it doesn’t seem like much so you don’t care about buying a few tracks, but when that decimal point moves, you actually have to think about it.

  11. mackro

    @Maura Johnston: Agreed, yet I figured people in this category have already resided to not being regular customers of purchasing music in the short term anyway. Even people who clearly can afford it don’t. Imagine how many more this year will stop for valid budgeting reasons.

    @Lampbane: That is a fair point. Moreso, I think the real barrier here is the $9.99 per album barrier. Once people see four digits per album, that has an even bigger impact. Not that albums have been selling well recently anyway, but the four digits will pretty much cement that in the short term thanks to the $1.29 per song increase.

    Perhaps in a future post that is more broad than Top 100, I’m curious if people will be selective with the $1.29 thing if it turns out their favorite labels not part of The Big Labels will accept the $1.29 pricing as a way to keep on keepin’ on.

    I stress that my point above was a Devil’s Advocate point. “The Devil” hasn’t been planning shit out well at all, as you’ve all seen.

  12. Anonymous

    You’d think the major labels would at least jack prices on ALL of their current hits. It’s interesting to me that Beyonce’s two first singles from Sasha Fierce have had their prices raised and her two singles have not. As for other artists, I will be curious to see how this pans out–it doesn’t even seem to be by record label as David Cook’s songs have not been increased while labelmate Kelly Clarkson’s has.
    What we have here is the true beginning of the end of the entertainment industry. First, an entire movie leaks onto the internet nearly a month before its release and now…one less reason to actually purchase music.

  13. Chris Molanphy

    @mackro: This is hardly a justification for the gross mismanagement of the big labels and their self attrition, but making an issue out of a 30 cent song increase, especially in a context that’s not as wasteful, seems a bit petty to me.

    I mostly agree with you. Actually, the justification for this increase would be near-bulletproof if Apple and the labels had negotiated a top fee of $1.15 instead of $1.29, because $1.15 or so is what 99 cents in 2003 dollars (when iTunes launched) turns into after inflation adjustment six years later.

    So, okay, there’s a bit of pure greed here, about 15 cents’ worth per song. But that ignores the five years in-between when peeps were still paying 99 cents as inflation marched on. And when you consider that this price is probably going to hold firm for at least another three years — neither Apple nor the labels want to go through this headache again anytime soon — then that extra 15 cents starts to look like a near-bargain.

    The real issue is Lampbane‘s — it’s all about psychology and breaking the $1 barrier. No price increase is going to feel trivial when everyone is used to the highest two-digit price available. But as I’ve been saying in my column here, part of me thinks it’ll actually be healthy — especially for consumers who should think a minute before clicking to buy anything in this economy — to start charging more for fad-of-the-moment hits. I do agree with VivaLaMainstream that’s it’s far less justifiable to charge a buck-thirty for five-year-old catalog tracks.

  14. Chris Molanphy

    BTW, as of now more than half the Top 100 is at 99 cents, still — 54, to be exact, vs. 46 at $1.29.

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