New iTunes Pricing Is Losing Labels Money

Executives within the major labels are confirming decreased sales on iTunes ever since Apple implemented variable pricing on the popular digital music store in April. Digital Music News reports that individual song sales have dropped, resulting in a decline in overall revenue.

The most popular songs on iTunes were set to $1.29, and even though a drop in sales was probably expected, the higher prices were supposed to compensate for that loss. Even worse, the sales slump has for all songs, not just the top tier tracks. One of the industry execs told Digital Music News:

“It’s back to the abacus to figure out the best mix.”

Once again, the industry made a bad move. Music fans are simply jumping ship, and moving to free streaming services. As in so many other cases, the recording industry’s attempt to make more money backfired, and those who invest in alternative business models are gaining momentum due to the repeated failures of the industry. These early results don’t mean that variable pricing will be given up, however. An executive said that, instead of admitting defeat, the industry will test and tweak pricing to optimize sales.

Perhaps now competitors will be able to overtake iTunes with new pricing methods. A new system employed by digital distributor INgrooves, which will offer clients the ability to set dynamic prices using technology from Digonex, calculates the optimum price for music in real time, based on demand. Can dynamic pricing attract more buyers than fixed pricing?

Did you stop buying music on iTunes? If so, where do you get your music fix now?

Photo via laist.com
Source: DigitalMusicNews, Billboard