Demand Pricing Update - Apple and ITunes

The variable and demand pricing strategies continue: Apple recently announced that it would raise the price of "hit" songs on ITunes - those in high demand - and lower prices for the extensive library of tracks that garner less volume and customer attention:

From the LA Times: "Apple raises prices as music sales slide":

"As for variable pricing, I've weighed in before on the need for record companies to try to make more money by charging less for music. The deal with Apple is a half-step in that direction. But it's also clearly an effort to extract more dollars from those who are already buying tracks, rather than grappling with the bigger problem -- the steady reduction in spending on music."

And from CNNMoney.com: "Apple Changes ITunes Pricing":

"Schiller said iTunes will now offer three price points for songs: 69 cents, 99 cents and $1.29. It will also offer all of the 10 million songs in its library without copy protection, and will allow iPhone users to download songs through 3G wireless networks. In a press release accompanying the announcement, Apple said the pricing of a song will be based on what music labels charge. The labels that have agreed to the pricing include the four biggest - Universal Music Group, Sony BMG, Warner Music Group and EMI. Many in the industry has been critical of Apple's 99-cent pricing, with some executives saying that it cut into profits on hit songs that could sell at a higher price."

Again, great resources are available in the PPS archives, including "Driving Demand Profitability with Pricing."

In a related story, rapidly increasing competition is forcing Ticketmaster to reduce their prices as well: "Ticketmaster Chief Moriarty Sees Lower Ticket Prices."

Pricing is getting a lot of major media attention as many companies are again focusing on foundational, critical business strategies. This is a great time for expert pricers to demonstrate their skills and expertise. Warmly, EM