Jobs dismisses iTunes price rise

Written by Brett Thomas

September 21, 2005 | 14:26

Tags: #itms #itunes #piracy #price-rise #profit #steve-jobs #yahoo-news

Companies: #riaa

The never-ending quest for legal, affordable music has gained a new ally today: Steve Jobs. According to Yahoo! News, the CEO of Apple Computers said at the Paris Apple Expo today that he would staunchly resist the pressures that he has received from the RIAA to charge more for his iTunes service, which he says would encourage piracy.

High prices are certainly a factor in piracy - just look at Microsoft's software - and when it comes to applying that theory to downloadable music, Jobs knows more than most. The iTunes Music Service (ITMS) is responsible for a whopping 82% of the legal music purchases in the US, attributed to a robust catologue and the software's ease-of-use and multi-platform support.

His belief is that recording companies have already seen an increased profit in their music by selling it digitally at current prices, which are $0.99 a song. Through the cutting back of marketing, production, and distribution fees, the record companies are already making higher profits on the nearly $0.65 per song that they get paid from Apple than they do on selling a CD.

In fact, a breakdown of what the CD costs are and what the record company profits from a normal CD release is published by Rolling Stone Magazine. In the meantime, ITMS makes less than $0.10 per song sold, meaning that all 500 million songs sold by iTunes only netted the service $50m in profit...a paltry sum for a company as large as Apple.

Making it clear that the recording industry has attempted to raise the prices now that he has made digital music a viable product, Steve-o said that "if they want to raise prices it just means they're getting a little greedy." The record labels' contracts with iTunes are up for negotiation at the end of 2005.

Jobs continued on to say that "Customers think the price is really good where it is," and that "we're trying to compete with piracy, we're trying to pull people away from piracy and say, 'You can buy these songs legally for a fair price.' But if the price goes up a lot, they'll go back to piracy. Then everybody loses."

This no-nonsense argument is one that many advocates of digital music (and some of piracy) have proffered, and it feels good to get some vindication from a CEO. But will Apple hold out? Can we trust Steve-o to be good to his word and not sell out the digital music world to corporate greed? Sing us your song in our News Discussion forums.
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