Macworld goes for the soft sell with budget-minded software

SAN FRANCISCO -- At past Macworld events, Apple introduced such innovations as the iPhone and the ultra-thin MacBook Air. Tuesday, the big news concerned 69-cent and $1.29 music downloads, and an upgrade to a $79 software suite.

"In this economy, to focus on launching expensive new computers doesn't make any sense," says Michael Gartenberg, an analyst at Jupitermedia.

Apple's iTunes Store has sold 6 billion songs for 99 cents each since launching in 2003. It now has the variable pricing that record labels have been requesting for some time, said Phil Schiller, Apple senior vice president.

Schiller was tapped to step in for CEO Steve Jobs, who traditionally has wowed crowds with an opening presentation. But Apple is pulling out of the trade show. And Jobs, who had announced that he would not appear this year, this week disclosed that he has a hormone imbalance that is affecting his health.

Apple previously sold single songs for 99 cents, most with copy-protection software. Apple has worked out arrangements with the record labels to drop the copy protection. By the end of the first quarter, Apple said its entire 10 million-song iTunes catalog will have no copy protection. That will allow people to use music they purchase in homemade videos, for instance, or move songs easily to another music player.

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In April, all song prices will change to one of three tiers: 69 cents, 99 cents or $1.29. Analyst Gartenberg expects back-catalog songs to be priced at 69 cents, with most new ones going up to $1.29. "I think 99-cent songs will pretty much start to disappear," he says.

Apple has faced competition from retailer Amazon, which began selling unrestricted music in 2007.

The Macworld conference is staged by IDG World Expo. Apple says it pulled out because it can reach people through its Apple Stores and the Internet. Some 3.4 million people go to Apple retail stores every week, "which is like 100 Macworlds," Schiller said.