Apple Prices Pop Songs at 99 Cents
Topic Pricing Concepts and Pricing Determination
Key Words Online music distribution, iTunes, Apple, EDLP
InfoTrac Reference A106982109
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News Story 

Apple Computer has hit pay dirt with its iTunes online music distribution system, which allows music-lovers to legally download favorite pop singles for a standard fee of just 99 cents per track. However, the computer giant is grappling with content and pricing issues arising from complexities of how songs and albums should be valued.

In the three months that the iTunes store has been online, pricing and availability on certain offerings have changed-for varied reasons. Under copyright law, the labels must pay the full, mandated per-track mechanical rate to publishers and songwriters for digital singles. Also, tracks longer than five minutes receive a larger publishing royalty. Variations in the length of tracks and albums also make standardized pricing a real challenge.

Despite Apple's best efforts to establish uniform standards, not all tracks the store sells are available as a la carte downloads. And while Apple has successfully held the line on song pricing-all available singles are 99 cents-numerous album bundles are priced higher than the $9.99 sweet spot.

Questions
1.

Cite an example of where Apple has struggled to price music downloads, and explain some factors that complicate the task.

Source Christ Molanphy, "iTunes: a user's view: album pricing varies; some tracks are missing," Billboard, August 23, 2003, v115 i34 p39(2).
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