iTunes: Price Hikes Will Encourage Piracy

Apple CEO Steve Jobs today claimed the world's biggest recording companies have begun to demand the iTunes Music Store raise its prices. But the Mac maker is responding with the spectre of a return to the days of mass online music piracy.

"We're trying to compete with piracy," he said. "We're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price'.

"If the price goes up people will go back to piracy," he warned. "Then everybody loses."

Slamming the labels' "greed", Jobs said: "The labels make more money from selling tracks on iTunes than when they sell a CD. There are no marketing costs for them.

"If they want to raise the prices it just means they're getting a little greedy."

Rumours that the music labels are pushing for higher prices have been doing the rounds ever since ITMS was launched in the US in April 2003. A year later, in May 2004, for example, it was claimed Apple had been forced to accept differential pricing for some tracks by the then five major labels: Universal, EMI, Warner, Sony and BMG (now Sony-BMG).

Yet to this day, the vast majority if not all of songs available on the UK store remain priced at 79p. Album prices do rise above £7.99, but typically for longer records only. Some albums sell for considerably less than the cost of an equivalent number of single-track sales. Apple has never pledged to offer albums at a single price-point, unlike single-song downloads.

That doesn't mean Apple isn't paying more for some tracks than others, but if it is, it's clearly confident that it can cope with different cost-prices by spreading the load across all the tracks it offers - at least until it reaches the point where it feels its customer-base will accept a price rise. For now, it seems, it feels there's more to be gained by touting a common price-point no matter what, an argument backed up by the competitors that have followed it into the digital music market, all of whom have adopted the same approach and, near enough, the same price points.

ITMS has sold more than 600m songs worldwide and is on course to pass the 750m mark in the late November/early December timeframe.

Story source: theregister.co.uk.