Doubts that iTunes will have differential pricing system

By Derek Sooman on April 24, 2006, 2:50 PM
Plans for the iTunes music store to adopt a differential pricing system look very likely to come to nothing; talks between Apple Computer and Sony BMG, EMI, Warner Music and Universal have not led to record executives convincing Steve Jobs to allow variable pricing.

The bone of contention between Apple Computer and the "big four" as they are called is Apple's one-price-fits-all business model, wherein each iTunes download is charged at a uniform rate of 99 cents per track.
The record labels dislike this pricing model they are accustomed to a system whereby different wholesale prices are charged. The record labels have been incessantly demanding a system of variable pricing, where they can charge more for some songs and less for others. Jobs, though, seems unlikely to budge.

Record executives have even gone on to say that at this rate, some labels might actually end-up pulling-off their music from the iTunes service. Analysts however feel that a more likely scenario is one where existing deals at some of the record companies will expire, and the two sides will continue to operate without a deal whilst they seek to reach terms.




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