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The Real Reason iTunes Songs Are Still Only 99 Cents

May 3, 2006 by Kirk Biglione

Yesterday Apple announced that it has renewed its contracts with the four major record labels and that iTunes pricing will remain 99 cents for individual songs.

It would appear to be yet another victory for Steve Jobs in his battle against the “greedy” record companies. Or maybe there are more practical reasons the record companies backed down in their demand for variable pricing.

Buried near the end of today’s LA Times coverag is this tidbit:

Others say that even if Apple permitted variable pricing, a sliding price scale would wreak havoc with music company’s current accounting systems. Executives at some labels say it would take them as long as 12 months to develop necessary databases to sell songs at variable rates.

“It’s really complicated to track royalties and copyrights and other payments for online sales unless everything costs the same amount,” McGuire said. “And if you decide you’re going to charge more for new songs, but once they’re 18 months old they revert to the price for older songs, its complicated to track all of that.”

You don’t read much about the entertainment industry’s back-office systems, but they frequently have a tremendous impact on everyday business decisions. Since the major labels make most of their money on accounting they’ll be happy to maintain the status quo until they can cook up a new system.

  • Apple Fights to Hold 99-Cent Download Line

Filed Under: iTunes, Music Tagged With: Apple, iTunes, Music, Record-Companies

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