Changes to iTunes prices raise music labels' hopes

The risks of the strategy — that consumers will be confused or turned away — are thought to have declined a lot since Apple launched iTunes. Back in 2003, Apple sought the simplicity of a single price as it tried to make its service ubiquitous.

That succeeded. Apple has an estimated 80% share of the digital download market and about 71% of all portable music players sold in the United States.

"Uniform pricing made a lot of sense especially in the early days of the iTunes store," said Michael Gartenberg, a technology analyst and vice president at Jupitermedia in New York. "Now the market has been educated about digital downloads. Apple understood that."

It also became apparent that consumers weren't entirely concerned about price and were more influenced by whether songs they bought online worked easily with their portable music players. For instance, for more than a year, Amazon.com Inc. beat iTunes on price, with song downloads at 79 and 89 cents and most albums between $5.99 and $9.99. While those songs could be transferred seamlessly to iPods with a downloadable program, most consumers haven't bothered to make the switch.

Recording companies noticed. While none would comment on the record for this story, privately they say that Amazon's inability to become the dominant force in song sales indicates that consumers aren't considered "price sensitive." In other words, people are willing to pay more.

A spokeswoman for Amazon declined to comment.

Another reason Apple is likely to be defining a new pricing system for the whole industry is that it also announced that all of its tracks will soon be free of copy protection, enabling other manufacturer's devices to play them.

For now, though, rival Microsoft Corp. says it won't be changing its mostly static price of 99 cents for songs in its online marketplace. Microsoft is also emphasizing a $14.99-a-month unlimited song subscription plan.

"This doesn't have any immediate effect on us other than the fact we'll have some songs on our service that'll be less expensive than some songs on their service," said Adam Sohn, Microsoft's director of marketing for its Zune music players. "That's the way we price right now."

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