iTunes and pricing

Worth a read in today's NY Times is this piece about record labels chafing against Apple's blanket 99 cents pricing plan at its iTunes Music Store. The central question is whether the 99 cent price tag on everything (well, not really everything - books on tape and some spoken word programming is priced higher) is what helps bring consumers to the service... and whether a range of prices would somehow drive them back to illegal downloads. Sony BMG Music Entertainment and Warner Music Group are the two major labels that are squawking the loudest about Apple's uniform pricing.

Jeff Leeds writes:

The divide among the four record companies reflects a broader philosophical argument about whether the fast-expanding digital market is stable enough to bear a mix of prices, particularly a higher top end, while millions of consumers still trade music free on unauthorized file-swapping networks.


"I don't think it's time yet," said Jimmy Iovine, the chairman of Interscope Records, Universal's biggest division. "We need to convert a lot more people to the habit of buying music online. I don't think a way to convert more people is to raise the price.


"I believe that he really feels that everybody isn't hooked yet into the whole concept," Mr. Iovine said, referring to Mr. Jobs. "You make it affordable, at a reasonable price, so they can learn about it. It's not an unreasonable position."

Apple has become the main market-maker for digital music - with about 75 percent of all sales. Still, isn't it natural to let the marketplace define what consumers will pay for digital music (and eventually, TV shows and movies)? It'd seem obvious that some older material from the vaults might be priced at 49 cents - or less - and that a highly-anticipated new song might go for $1.49 or $1.99, especially if it's accompanied by additional material, like music videos.

Whether Apple will get in the business of selling movies and TV shows has been the subject of a lot of speculation. This friction between Apple, Sony, and Warner could have an effect on whether owners of video assets (like, um, Sony and Warner) decide to work with Apple.