Apple Gives iTunes 3-tiered Pricing

According to the article “Apple gives iTunes 3-tiered pricing” found in the business section of the Chicago Tribune, Apple’s iTunes music store has decided to change the prices of the songs they sell. Originally, every song cost a constant .99 cents, no matter how old, new or popular the song was. Now, in the new iTunes pricing system, songs will cost 69 cents, 99 cents, or $1.29 each, depending on the song’s popularity. Senior Vice President Philip Schiller announced this new system at the Macworld conference. Another change that Apple is making is that its entire music catalog (8 million songs currently and 2 million more by the end of March) will be available in versions that are striped of anti-copying software. That means that when you buy those songs off iTunes there’s no longer a limit to the type of digital media players you can transfer music with or the number of times you can burn a playlist to a CD. The old system restricted users from transferring downloaded music and videos to a certain number of computers and made listening to iTunes on non-Apple devices problematic. Apple decided to fix these restrictions and ITunes users now have the option of upgrading their old songs to this new format for 30 cents a song or 30% of the cost of an album.
In my opinion from the business perspective, this was a great decision for iTunes to make. They will increase their profit by raising the prices of popular songs because it’s more likely for people to buy the newest songs than random old songs. Also, transferring all the songs to a format that has fewer restrictions is better for consumers and they will also make a profit by offering the upgrade. Overall, Apple will most likely make a huge profit from this change in their business. On the other hand, however, as a consumer the new prices are frustrating. iTunes has always had a standard price for songs; 99 cents. It was easy and quick access to music and the prices were reliable. Now that the newest songs are more expensive, I predict that more people will turn to illegal free downloading (ex. Limewire) to avoid the extra cost.