iTunes Price Cut: Apple Announces Tiered System, DRM-Free Tunes

SAN FRANCISCO — Apple Inc. is cutting the price of some songs in its market-leading iTunes online store to as little as 69 cents and plans to make every track available without copy protection.

In Apple's final appearance at the Macworld trade show, Apple's top marketing executive, Philip Schiller, said Tuesday that iTunes song prices will come in three tiers: 69 cents, 99 cents and $1.29. Record companies will choose the prices, which marks a significant change, since Apple previously made all songs sell for 99 cents.

Apple gave the record labels that flexibility on pricing as it got them to agree to sell all songs free of "digital rights management," or DRM, technology that limits people's ability to copy songs or move them to multiple computers. Apple had been offering a limited selection of songs without DRM, but by the end of this quarter, the company said, all 10 million songs in its library will be available that way.

While iTunes is the most popular digital music store, others have been faster to offer more songs without copy protection. Amazon.com Inc. started selling DRM-free music downloads in 2007 and swayed all the major labels to sign on in less than a year.

Schiller also announced that iPhone 3G users will be able to buy songs from the iTunes store using the cellular data network. Previously, iPhone users could shop for tunes when connected to a Wi-Fi hot spot.

The iTunes changes marked the highlights of Schiller's run as a stand-in for CEO Steve Jobs, who used to make Macworld the site for some of Apple's biggest product unveilings, such as the iPhone. Apple said last month that Jobs would not address the throngs this time because the company plans to pull out of Macworld next year.

Apple shares slipped $1.56, or 1.7 percent, to close at $93.02.

Schiller got a warm welcome from the attendees _ who packed the convention hall despite the pall cast over the industry by the economic downturn _ especially at the start of his talk, when he thanked them for showing up despite Jobs' notable absence. He ran seamlessly through his 90-minute presentation, getting applause and oohs from the audience, varying little from the format of slides and demos established by Jobs. And like Jobs, he gushed about Apple's products being the best in the world.

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"Phil did an exceptionally good job in representing Apple," said Tim Bajarin, president of technology analyst group Creative Strategies Inc.

Lower iTunes prices were Apple's only nod to the recession _ and an oblique one at that, as record labels have been asking for years to set varying song prices. Rather than an inexpensive new Mac to lure budget-conscious buyers, Schiller unveiled a new $2,800 Macbook Pro laptop with a 17-inch screen and the sleek aluminum casing the company debuted with the super-thin Macbook Air.

He also unwrapped new versions of two software packages for Macs, including the iLife multimedia programs. For instance, iPhoto '09 can recognize faces and sort photos based on who's in them. GarageBand '09 includes videotaped, interactive music lessons given by Sting and other musicians. Apple added more professional video editing features to iMovie '09.

Apple's answer to Microsoft Corp.'s Office productivity suite, called iWork, also got a makeover, including zippy new ways to add animation between slides in the Keynote presentation software. And Apple unveiled a "beta" test version of a Web site for sharing documents, iWork.com. Unlike Google Inc.'s online documents program, however, Apple's version does not allow people to edit documents in a Web browser.

Apple said the thin new 17-inch aluminum-cased Macbook Pro, which joins an existing 15-inch model, will start shipping at the end of January. Perhaps the biggest twist is the laptop's battery, which is designed to last longer on each charge _ up to seven or eight hours _ and work after more charges than older batteries. But like Apple's iPod and the super-slim Macbook Air, the battery will be sealed inside and the owners won't be able to remove and replace it themselves. Instead, they'll have to spend $179 to have an Apple store expert swap in a new one.

Jobs' decision not to attend Macworld sparked a new round of fears that the CEO, a survivor of pancreatic cancer who has seemed gaunt in recent appearances, was in worsening health. To put the questions to rest, Jobs said Monday he is getting treatment for a hormone imbalance that caused him to lose weight, and urged Macworld attendees to relax and enjoy the show.

And after the Tuesday keynote, in which nothing purely new was disclosed, the company's decision to substitute veteran salesman Schiller for master showman Jobs seemed even less questionable.

Comments

[Torrentlover]

Too late for me to pay for songs. Since the RIAA decided to shut down Napster, I haven't bought a single CD. The sad thing is that I purchased tons of CDs back in Napster days because I was exposed to music that wasn't played by some low IQ disc jockey.

Heck, I haven't even bothered downloading anything in the last three years because it's not worth my time. RIP EMI, Sony Music and the rest of you greedy b@stard music delivery companies.

[zippy the cow]

It's okay... those companies havent released anything worth a damn in the past three years, anyway.

[Veri]

Yeah. I am more concerned with the economy. However, I think I'll still take that $0.69 and stick it in my bank account. 'Kay, Thx, Bai.

[RockySoldier]

uh, weird.

[solid]

It's your money. Good for you I guess....

[TheBrizz]

I became worried when I read that the record companies will choose how their songs are priced. The record companies have proven to be just about as greedy as the oil barons. This probably won't affect me much, however. I used to be a certified iTunes junkie, but since I discovered torrents, I haven't bought anything from them in over a year.

[frantaylor]

You got a lot of nerve stealing music and then calling others 'greedy'.

[bokiluis]

I Second that One!

[solid]

I think the sayings is that people who live in glass houses shouldn't throw stones.

[milo h minderbinder]

The itunes stuff is good news, and the new laptop looks pretty cool (although pricey...although probably not much more than similar competing models with all the same bells and whistles).

But this got a REALLY bad reaction today because Apple hasn't updated most of their other computers in months, they are way out of date and no longer competitive with PCs in the same price ranges.

Apple, time to quit snoozing and get the desktop machines up to snuff.

[TheBrizz]

I think it's pretty clear that desktops are secondary to Apple these days; I think most of the industry is headed in that same direction.

[milo h minderbinder]

I'm fine with secondary...what bugs me is not doing no-brainer updates that require no R&D whatsoever like swapping in faster CPU, graphics chips, memory, bigger drives, etc. Or if they are not going to update a machine for a year, at least drop the price every so often!

[geektothecorenj]

More LAptops were sold last year than desktops. People want mobility why do you think cell phones do everything now.

[humble liberty]

Oh and they could embrace the Hulu model. I can watch every Arrested Development episode or watch movies for free but I'm paying $10+ per album (unless I want it physically at CD quality)? Yeah right.

I'll "watch" lots of ads if it helps the artist and I get the stuff.

[jdj81]

How much difference does a few hundred MHz really make these days? Hrm? Because a Core Duo is already overkill for the web browsing, media-lite use cases that apply to most of Apple's market. This isn't 1999.

Even as a "power" user (web dev, graphic design, etc.), I could hardly care as long as they stay current on a yearly basis or so. Just give me a Mac Pro and I'm good for 4 years at least.

[zippy the cow]

I think the laptops need an update - you can get a 2.2 mhz Duo for like $700 these days, and the apple machines seem way expensive. Deluxe, but too pricey!

[observer007]

Wow - I didn't know there were people out there who still haven't found out about torrents. I guess there still are people apple can put the squeeze on -

[proggirl]

Torrents don't work for everyone. If you have slower Wi- fi, or dial-up, torrents are problematic at best.
There's also the pay issue. In the old school record industry model, of which commercial downloads are an extension, the performer gets next to nothing. For a torrent, a performer gets nothing, which is much harder to live on.

[blindjester]

I choose not to steal.

[proggirl]

Thank you. I agree.

[Skoutt]

Ughh...downloading torrent files is still illegal last time I checked. And, I believe most .torrents are downloading with a tracker, making anonymity nearly impossible.

[SpaghettyIrish]

It's not the downloading that gets you the trouble, it's the uploading. Rarely a problem if you have Peer Guardian.

[rigveda]

>Wow - I didn't know there were people out there who still
> haven't found out about torrents. I guess there still are
> people apple can put the squeeze on

As a poor, unsigned musician who sells his tracks independently on iTunes, I raise my middle finger to you! Pay for your music, jerk!

[zippy the cow]

I only torrent stuff like ELO, and things I bought anyway but lost the CD, etc.

BUT... okay, i try out music from people sometimes. However, I've found so many bands this way.. then I buy the downloads (usually form amazon mp3) or the CDs.

Without downloading I never would have gotten into so many bands... Stereolab, say have sold 10 albums starting with me downloading a few tracks.

Good luck to you though, there are cheap bastards out there who will never buy anything.

[herov]

Well,

I'm not a musician. But it always amazed me that people like Ob"jerker007" complain about a buck or less now a song or condone stealing music and they'll pay 3 bucks for a cup of coffee that stays with them, for what? Two hours?!

A good song, (any song for that matter, or film or other type of media for sale,) LAST A LIFE TIME.

Stop being the real sheep. Pay for what you take.

Dick.

[davidwayneosedach]

This is exactly the right tine for this! Smart business move. Now cut the price of the iPod as well.

[milo h minderbinder]

They seem like a good deal for what they offer - you can get one starting at $49.

[Elahrairah]

More money for DRM free?

I think not. I'll get them elsewhere.

These music execs just dont know how to treat the golden goose, do they?

[SwingingFromCenter]

Yeah, it's amazing how backward their thinking is.

I mean, when the songs were 99 cents, I would still get my music free more often than not, but if I was feeling lazy I'd go ahead and buy a couple tracks just so I wouldn't have to fire up my p2p client. A 30% increase in price with more sure to come? Eh, I'll just go back to getting all of it for free.

Which is bad news for the industry, since I've got about 2 terrabytes of data to share :P

[milo h minderbinder]

Most of the songs are STILL 99 cents. Some are CHEAPER at 69 cents. The labels just insisted on being able to charge more for the most popular and newest songs. We'll see if people are willing to pay the 1.29 or not, I'll bet we don't see that price that often.

[milo h minderbinder]

"More money for DRM free?"

No, you misread the article. All will be DRM free. There will be three different prices, one the same, one lower, and one higher.

[Indo001]

What a great way to mask a price hike for a majority of songs to 1.29

[milo h minderbinder]

We'll see. He did promise that more songs will be $.69 than $1.29, and I'll bet that's the case.

The market just won't be willing to pay more for all but a few new and popular songs.

[Simmadown]

How did he promise that more songs would be $.69 vs. $1.29 if the record companies get to chose the price?

[Rule Of Law]

There's a Recession--soon to be a major Depression--on, right now. This is a savvy marketing move by Apple!

[zippy the cow]

Sonny, in the Dust Bowl we stood in line all day to get 1 music download...

[sydneyismyalias]

I resisted the iPod craze until we decided, two years ago, to buy one for each of us and I'm hooked. I listen to podcasts, Rachel Maddow and NPR Science Friday are two of my favs. I used to be a CD only person, how quickly I have changed. I still buy full albums but if I like one song, I am no longer forcing myself to hold out or buy a crappy album. I use Amazon and iTunes for my songs.

[Manchurian]

If you dig indie music, try eMusic.com. The songs average out to about 35 cents or so each (you get a set amount to download every month for a small subscription charge). And, best of all, you're supporting and encouraging the musicians who make the music.

[SabrinaFair]

My iPod is my most favorite thing for tuning out the dreadful ride on the subway.

[jonmonbuckeye]

I use it to tune out everyone i don't like, which is why it is never been turned off.

[avonne321]

exactly.

[MyNameIsJames]

Its almost painful not seeing Steve Jobs deliver the "big presentation"

[GerryS]

so what, I still do not "need" an I-pod-

[arspar183]

my daughter bought me a nano for x mas for my long train rides to work. i still have my sony walkman with cassette and am / fm. i just can't give up listening to liberal talk radio! which way to the stone age?

[milo h minderbinder]

Talk radio? Podcasts, my friend. Podcasts.

[whitneyk]

There are tons of competitors to the iPod which include a FM radio. Sansa would probably be the best bet if you want a cheap, low capacity player.

[Tigrrl]

There is a tiny little device that will pick up broadcast radio that you can attach to your iPod, I forget who makes it, my husband uses it when he has insomnia. And really, all of the good radio is available via podcast, so you can listen to it when you're ready, and not be at the mercy of the schedule.

[amdezurik]

same here, i LIKE music and cannot stand the over-compressed mid-range heavy stuff like iplods deliver...

[milo h minderbinder]

You do realize you can use uncompressed files, right?

[TheBrizz]

Get off your high horse. Apple has never marketed the iPod to replace the audiophile's home stero system. It's meant to be taken on the subway, the treadmill, etc. I'll take a negligible decrease in sound quality in exchange for the ability to carry over two weeks' worth of music in the palm of my hand.

[zippy the cow]

but... the iPod touch makes my geek muscle twitch...

[The Patriot]

The days of "selling" music are over... all artists will eventually give away their work, and focus the monetizing on concert performances and merchandise - the two places where they get the biggest cut of the pie - watching the Record Companies prolong their death through itunes (and all the other services like it) is simply pathetic. (yes i am a musician, and yes, i do practice what i preach - thepatriotaxe.com - go get some free tunes)

[constancedogood1]

I think I love you!

[pjlowry]

Your way of thinking is exactly the way I'm going. I don't buy anything. But when an artist I want to support comes to town, I go all out to support them through their concerts because I know that is where they generate the majority of their income. I get the best seats I can, and I dump everything I can in merchandise cause I know it all goes to the artist. Shirts, mugs, programs, whatever I can get.

If you truly want to support the artist, that's how you do it. You do it by attending shows because that is where they really make their money.

[solid]

I appreciate your effort, but I don't like going to concerts much. I would rather pay you 99 cents per song and listen to your work as many times as I want.

[Free2Speak]

When 90% of the song fall under $1.29 it cookies for Apple.Now the record companies has it nose under the tent expect the $1.29 to be $2.00 in no time.. $.69 song will be songs you cant give a away.

[milo h minderbinder]

We'll see if it's true, but today they said more songs would be .69 than 1.29.