Skip to Content

Act surprised: Higher iTunes prices mean slower sales

by Kent Pribbernow Feb 10th 2010 at 9:00AM

Warner Music revealed on Tuesday something we've all long suspected: music sales have witnessed a growth slump on iTunes since the record labels pushed Apple to implement a variable or tiered pricing model. As a result, consumers have slowed their spending habits of media on iTunes, making fewer purchases and fewer Miley Cyrus downloads -- I'm ok with that part in fact.

The cause of decelerating sales can be attributed the associated price hike in new or premium content, which received an unpopular 30% cost of living increase from $.99 to a more salty $1.29 price point. It turns out that people are reluctant to pay thirty cents more today for something that cost a buck yesterday. What is it with you crazy people and your fickle spending habits?

This decline in spending is beginning to eat into Warner's bottom line, where iTunes makes up the majority of its digital revenues. The company saw a 50% decline in revenue in their December quarter, at just 5% growth -- down from 10% in the previous quarter. Ouch! Note to businesses everywhere: This is what happens when you issue a price increase in the middle of a recession. We'll have to see if the record companies take a hint and reconsider their pricing at all.

View Tags

Related Stories

Categories

iTunes Music

Warner Music revealed on Tuesday something we've all long suspected: music sales have witnessed a growth slump on iTunes since the record...
 

Add a Comment

Sign in »
*0 / 3000 Character Maximum

30 Comments

Filter by:
aaron

I have never felt remorse for the record companies, and im a musician. What other industry could resell their products 5 times over?? How many people own the white album on Vinyl, 8track, cassette, cd and mp3???

February 17 2010 at 9:53 AM Report abuse rate up rate down Reply
Johnny Thrash

This is what happens when people, like me, refuse to pay 1.29 for a song.

I'm glad to hear I'm not the only one.

February 10 2010 at 4:02 PM Report abuse rate up rate down Reply
LOST CityStar

call me old school. but i still find the best thing to do is just to buy the physical cd. rip it. and put the actual cd in my closet. the .99 price is good for pop music but if i can buy a cd for 7.99 or pay .99 a song for a 12 song cd, the cd will win every time.

February 10 2010 at 1:57 PM Report abuse rate up rate down Reply
1 reply to LOST CityStar's comment
Dan

Yeah but what I like about iTunes is that songs are sold one at a time.

I have over 200 CDs. On many of them I only like one song, but had to buy the whole album to get it.

February 10 2010 at 10:10 PM Report abuse rate up rate down Reply
JimWall

I've changed how I buy on iTunes. You bought 10 tracks, and it was 10 bucks, now when I check the price is an unpleasant surprise. I've cancelled sales at the last minute because of this. I feel price gouged. Amazon will offer a better deal sometimes. There are still free ways to get a song too.

February 10 2010 at 1:16 PM Report abuse rate up rate down Reply
Andy Marshall

yet no one questions Apples determination to raise the price of eBooks?!
...or no one dares to question Jobs.

February 10 2010 at 12:00 PM Report abuse rate up rate down Reply
1 reply to Andy Marshall's comment
Steve

Apple isn't the one raising the ebook prices. The publishers are pushing for that.

Besides, even if Apple were the one, I think the reason no one questions it is because no one really cares. Not too many people are that interested in the iPad, and even fewer buy that many ebooks.

February 10 2010 at 12:48 PM Report abuse rate up rate down Reply
Jon

I've bought a dozen songs from iTunes in the last 6 months, all were 99 cents. And I have 8 songs in my wishlist right now, all 99 cents.

The last time I remember buying any songs at a different price was last summer. I bought about 90 songs, and out of those maybe 10 were either more or less than 99 cents.

I don't think any of the songs I've bought were current hits, though, it's almost all older stuff. Maybe folks that are more interested in the songs on the charts right now are seeing more $1.29 prices?

February 10 2010 at 11:42 AM Report abuse rate up rate down Reply
Izzy

Maybe it's just because most music nowadays sucks.

February 10 2010 at 11:29 AM Report abuse rate up rate down Reply
1 reply to Izzy's comment
Dale

This should be downvoted into oblivion. You clearly haven't listened to even a fraction of today's music.

February 10 2010 at 11:53 AM Report abuse rate up rate down Reply
tuaw,com

There are lots, but they're not particularly popular. E.g.:
http://itunes.apple.com/us/album/chant/id158043498?i=158044007

February 10 2010 at 11:15 AM Report abuse rate up rate down Reply
Oboewan

If I can buy an iPhone game for the same price as one song, the system is broken.

Heck, I can buy TWO songs in TTR3 for less than the cost of one iTunes song. Someone explain that to me.

February 10 2010 at 10:29 AM Report abuse rate up rate down Reply
3 replies to Oboewan's comment
willyu34

the opening picture... Oink Oink? XD
=============
Although they say it's revenue neutral/gain although sales is down, that trend will probably continue and thus they'll have a net loss in due time.

On a related news, the CEO seems to be lamenting how digital publishing will have more wiggle room to charge people more money. It may be news to the CEO, but most people who would read digital book also knows how much money it saves the publishing industry, thus will NOT pay a gouging price for eBooks. We'll have to wait and see how the new >9.99 ebooks will hurt the publishers. (I know I am not buying ebooks > 9.99)

February 10 2010 at 10:12 AM Report abuse rate up rate down Reply
Buy an ad here

Hot Apps on TUAW

Tweets

© 2012 AOL Inc. All Rights Reserved.