Amazon discounts top MP3s in UK, raises price in U.S.

Following iTunes’ lead, Amazon has raised the price for downloading some songs (i.e. the popular ones) from 99 cents to $1.29. A strange move, considering only yesterday it discounted the price of top-hit songs in the UK to £0.29, down from the normal £0.59.

Walmart has followed suit, raising the cost of popular songs to $1.24 each (up from 94 cents).

The takeaway: What's going on here? iTunes, the Hertz of online music, raises prices, offering an opening to the Avis, Amazon, and the #2 player responds by also raising prices? One analyst sees the hike as rooted in Apple's longstanding resistance to variable pricing, even as record companies pressured them to sell hotter songs for more. Now that Apple has relented, says analyst Matt Rosoff on his cnet blog, Amazon is "probably responding to price increases by the record labels, which were made possible by Apple's capitulation." He adds: "I can't imagine Amazon's excited about raising prices in a recession."

Another explanation for the hikes by both iTunes and Amazon: Record companies are trying to push back against the trend to people cherry-picking individual tracks, rather than buying the entire album. Note that prices for buying entire albums from both online stores remain unchanged, at $10 or less— typically a considerable discount from buying all the tracks individually.

Comments

[Paul Payton]

With so many other resources - legal (artist and record label sites and other promotional venues) and extra-legal - available for digital downloads, I think that Amazon's move is grossly counterproductive. A one-third jump in prices does not seem justified, and will put people off from sampling new music and/or new artists at a time when the creative community needs the support. It's hard to believe that a few cents per copy for most artists (with the limited number of downloads most will sell) will offset what increased exposure would bring them.