iTunes to Begin Variable Pricing on April 7

Earlier this year, Apple announced that iTunes would soon become 100% DRM-free, which was great news for many, myself included. As I mentioned around the same time, I had no prior interest in using iTunes for the DRM reason, and well, if it wasn’t DRM, it would have been the 128Kbit/s bitrate. But since then, both factors have improved, and I’ve been taking advantage of the service quite a bit.

In the same announcement, Apple also divulged information about upcoming changes to their pricing scheme. As it stands now, pretty much every song on the service is sold at a flat rate of $0.99. I have never really seen an exception – I’ve even seen 10s songs being sold for the same price. But starting on April 7, that’s going to change. Rather than a simple flat rate, we’ll see three different price points: $0.69, $0.99 and $1.29.

From how it appears, “hot” music will be priced at $1.29. So if you want the latest single from a popular artist, don’t expect to see it for $0.99. It’s of course up to the record companies to decide which tracks sell for such a rate, but you can expect anything in a top list to be available for that price. The majority of the music is sure to stick to the $0.99 pricing, although it’s not too clear what exactly will qualify a song to be priced at $0.69. If I had to guess, anything that’s not a huge seller, or older tracks, will likely see the lower price-tag.

There’s speculation hovering around what will happen thanks to this change, and personally, I can’t see it going over too well with consumers. I also don’t expect everyone who is in the habit of purchasing the latest singles for $0.99 to begin purchasing them for $1.29. In the end, the record companies still may come out ahead, but I’m highly doubtful we’ll see records broken with new singles anytime soon.

Some music industry veterans are criticizing the 30% hike price, saying the timing is tone deaf because it comes in the midst of a recession and at a time when spending for online music appears to have reached a plateau. “This will be a PR nightmare,” predicted former EMI Music executive Ted Cohen, who is managing partner of digital media consulting firm TAG Strategic. “It is for the music industry what the AIG bonuses are for the insurance industry.”