iTunes price changes deliver mixed results

Posted:
in iPod + iTunes + AppleTV edited January 2014
Price increases that took effect on Apple's iTunes Store last week reportedly hurt unit sales of some of the most popular songs but ultimately managed to drive marginal increases in overall revenues for the digital download service.



For example, the 33 songs on the iTunes top 100 seller list that saw their price increase from 99 cents to $1.25 sold an average of 12.5 fewer units last week than the week before, according to an analysis conducted by Billboard [PDF], which has long served as a barometer for U.S. music sales. Meanwhile, the 67 songs in the list that remained at 99 cents saw an average unit sale increase just shy of 10 percent.



When grouped together, the 100 songs in the top seller list saw unit sales dip only half of a percent from 4.64 million units the week before the hikes to 4.62 million the week after. But with many of those tracks priced 30 percent higher, Apple actually witnessed an increase in iTunes revenues for the week.



Billboard in its report does not pinpoint this actual sales increase however, and it's not clear how precise the publication's estimates are. Instead, it presents a couple of theoretical scenarios, mainly because iTunes doesn't monopolize the digital music business entirely, leaving the possibility that some customers may have chosen to purchase some of their songs last week from an alternative service that didn't raise its prices.



For instance, if every other service raised their prices to mirror Apple's across the board, songs in the iTunes top 100 list would have generated 11.8 percent higher revenues due to lesser fluctuation in consumers' purchasing patterns. However, if other stores didn't instate the same increase, revenues from those same songs would brought in only 9.5 percent higher revenues, assuming iTunes' share of the market is 80 percent.



In the hours following the iTunes price increase, several other digital download stores -- such as Wal-Mart and Amazon MP3 -- did indeed reflect price increases themselves, but not to the same degree as iTunes. For example, 6 of the top 10 and 29 of the top 100 songs on iTunes saw their price increase to $1.29 last Tuesday, but none of the top 10 singles and only 10 of the top 100 songs reflected price inflation over 99 cents over at Amazon.



Still, a single week's worth of data isn't conclusive enough to gauge the impact of the price changes due to a number of other unrelated variables, such as the release timing of certain singles. Billboard notes that if the "expected second-week drop of Black Eyed Peas' 'Boom Pow Pow' is taken out of the calculations, the 33 songs [in the top 100] priced at $1.29 sold only 6.9 percent fewer units" compared to 12.9 percent fewer units.



Meanwhile, a few popular single tracks with fewer expected week-to-week fluctuations did show some adverse affects following the price changes, such as Akon's "Beautiful," which saw sales slide more than 8 percent compared to a 1.5 percent dip the week earlier. On the other hand, sales of Akon's entire album "Freedom" -- still priced at $8.99 and representing a better deal given that 3 of the 4 songs fetch $1.29 by themselves -- rose 18 percent.
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Comments

  • Reply 1 of 41
    teckstudteckstud Posts: 6,476member
    A 30% $ increase in the sale of anything is a negative- no matter where the blame lies.
  • Reply 2 of 41
    rainrain Posts: 538member
    <ed: nein.>
  • Reply 3 of 41
    ivladivlad Posts: 735member
    I think record companies will realize that this was a mistake, its more phycological than actual price. Did they study any economics at all? Why they think $19.99 is more affordable than $20 item.



    I think Apple should team up with all other service providers and push for c99 prices.
  • Reply 4 of 41
    patsfan83patsfan83 Posts: 156member
    Bottom line:



    Winners- Apple, Record companies (more revenue).

    Losers- Consumers (higher prices, less people download).
  • Reply 5 of 41
    nceencee Posts: 836member
    This all reminds me of what happens all to often at restaurants.



    When things slow down, they (most) give smaller portions and charge more? Which has folks staying away, and in many cases, causing the restaurant to go out of business.



    Then there are the ones that give you the same amount or even MORE, but charge for what you get, stay in business and folks say things like ?



    "Hey, have you eaten at (X) lately"? "I went last night and the portions are even more then before" "not sure how they can do it, in these tough times, but they are, and the foods as great as ever"!



    Which makes the most sense?



    Skip
  • Reply 6 of 41
    bigmc6000bigmc6000 Posts: 767member
    Quote:
    Originally Posted by iVlad View Post


    I think record companies will realize that this was a mistake, its more phycological than actual price. Did they study any economics at all? Why they think $19.99 is more affordable than $20 item.



    I think Apple should team up with all other service providers and push for c99 prices.



    I think it's just a temporary thing until people adjust to it. We've been used to paying 99 cents so we hesitate to pay 1.29... For now... After a while 1.29 won't seem like it's that expensive because you've been seeing 1.29 for a while now. It's pretty similar to gas actually - once something has been at a certain price for a while, even if it's higher than what it should be, you get used to it.
  • Reply 7 of 41
    melgrossmelgross Posts: 30,517member
    Quote:
    Originally Posted by rain View Post


    www.thepiratebay.org

    www.isohunt.com



    The only way to fight RIAA rape and greed is to bring them to their knees.



    I don't think that honest people would agree with you.



    Those sites rape as well.



    By getting from them, you are ensuring that the artists get NOTHING.



    But you don't care, do you? Just thinking of yourself.
  • Reply 8 of 41
    johnnykrzjohnnykrz Posts: 152member
    Did anyone ever find any $.69 tracks? Also, has anyone ever found any HD movies for rent from iTunes (without an Apple TV)?
  • Reply 9 of 41
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by melgross View Post


    I don't think that honest people would agree with you.



    Those sites rape as well.



    By getting from them, you are ensuring that the artists get NOTHING.



    But you don't care, do you? Just thinking of yourself.



    Why, you sound like Frodo Baggins to his Gollum.
  • Reply 10 of 41
    walshbjwalshbj Posts: 864member
    When I paid a buck for a 45rpm - in 1977 dollars (two tracks) - was I getting ripped off?
  • Reply 11 of 41
    Quote:
    Originally Posted by PatsFan83 View Post


    Bottom line:



    Winners- Apple, Record companies (more revenue).

    Losers- Consumers (higher prices, less people download).





    Less people download = less revenue = losers = Apple & Record Companies & Artist & Consumer



    It?s the government business model of, if you are not making enough raise prices.

    Instead of lowering them to encourage new users, they punish the current ones.
  • Reply 12 of 41
    teckstudteckstud Posts: 6,476member
    Quote:
    Originally Posted by walshbj View Post


    When I paid a buck for a 45rpm - in 1977 dollars (two tracks) - was I getting ripped off?



    No but that $8.99 8-Track tape in 1978 you were.
  • Reply 13 of 41
    Quote:
    Originally Posted by bigmc6000 View Post


    I think it's just a temporary thing until people adjust to it. We've been used to paying 99 cents so we hesitate to pay 1.29... For now... After a while 1.29 won't seem like it's that expensive because you've been seeing 1.29 for a while now. It's pretty similar to gas actually - once something has been at a certain price for a while, even if it's higher than what it should be, you get used to it.





    Maybe, but there is something about crossing over that .99 cent mark.



    It makes it seem like so much more, maybe even simply because it is not an even number,.
  • Reply 14 of 41
    melgrossmelgross Posts: 30,517member
    Quote:
    Originally Posted by JohnnyKrz View Post


    Did anyone ever find any $.69 tracks? Also, has anyone ever found any HD movies for rent from iTunes (without an Apple TV)?



    While I haven't looked for 69 cent tracks, there are a number of HD movies AND Tv shows for purchase and rental.



    It's right there. Go to the left side of the iTunes window. You'll see:



    MORE IN MOVIES & TV



    Under that title you'll see:



    HD Movies (NEW)



    HD TV Shows



    TV Shows Just Added
  • Reply 15 of 41
    melgrossmelgross Posts: 30,517member
    Quote:
    Originally Posted by teckstud View Post


    Why, you sound like Frodo Baggins to his Gollum.



    You know as well as I do that what I said is true.
  • Reply 16 of 41
    melgrossmelgross Posts: 30,517member
    Quote:
    Originally Posted by walshbj View Post


    When I paid a buck for a 45rpm - in 1977 dollars (two tracks) - was I getting ripped off?



    That would be $3.51 in 2008, more today.



    Try this page:



    http://www.westegg.com/inflation/



    He updates it every year. It's very useful
  • Reply 17 of 41
    tomasftomasf Posts: 3member
    Quote:
    Originally Posted by melgross View Post


    I don't think that honest people would agree with you.

    Those sites rape as well.

    By getting from them, you are ensuring that the artists get NOTHING.

    But you don't care, do you? Just thinking of yourself.



    Yes, nothing. Just as if you didn't buy the music at all. So is not buying the music at all also "rape"? Get real. When artists offer their music at reasonable prices, I'll gladly buy. Until then, they have no-one to blame but themselves.
  • Reply 18 of 41
    melgrossmelgross Posts: 30,517member
    Quote:
    Originally Posted by MissionGrey View Post


    Less people download = less revenue = losers = Apple & Record Companies & Artist & Consumer




    No. It depends on the mix as was shown.



    In eco 101 we all learned that selling more doesn't always mean higher profits. There is a point where number of sales x price gives the highest profitability. That's never at the lowest price.
  • Reply 19 of 41
    Quote:
    Originally Posted by melgross View Post


    That would be $3.51 in 2008, more today.



    Try this page:



    http://www.westegg.com/inflation/



    He updates it every year. It's very useful





    Thats cool, thanks
  • Reply 20 of 41
    tofinotofino Posts: 697member
    Quote:
    Originally Posted by walshbj View Post


    When I paid a buck for a 45rpm - in 1977 dollars (two tracks) - was I getting ripped off?



    the question is: did you get ripped off when you bought it again on 8 track, cassette tape and then again on cd? if the argument by the record labels is that we don't own the music we buy, how about an 'upgrade' when new media comes out?
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