iTunes Tiered Pricing is Right Move

Apple made two noteworthy announcements in conjunction with the annual Macworld event this week. First, Apple is dropping Digital Rights Management from the library of songs on iTunes. This move will enable easier song sharing, which you can view either as piracy or creating more exposure. Second, tracks sold on iTunes will now be priced using a three price points: .69, .99. and 1.29. This change is a significant departure from the flat rate price of .99 that iTunes has had since its inception.

The time is right for both moves, especially the tiered pricing system. Setting prices for all tracks at .99 in the beginning was instrumental in gaining consumer acceptance of paying for music by the song. The three-tiered system acknowledges different values for different songs. If you are looking to add an obscure disco song from the late 1970s, it should cost less than a top hit from today. Now that Apple dominates the music download market, it has the leeway to institute tiered pricing. The change in strategy returns some pricing power back to the music companies, who have fought hard for having a voice in how their products are priced.

Link: Fast Company Technomix Blog – “Apple iTunes Dropes DRM, Adds Tiered Pricing, 3G Downloads”

Author: Don Roy

Don Roy is a marketing educator, blogger, and author. His thirty-year career began with roles in retail management, B2B sales, and franchise management. For the past 22 years, Don has shared his passion for marketing as a marketing professor. Don's teaching and research interests include brands, sports marketing, and social media marketing. Don has authored over 20 articles in scholarly journals, co-authored two textbooks, and self-published three books on personal branding. Don is an avid hockey fan and enjoys running. He and his wife, Sara, have three sons. View all posts by Don Roy