iTunes Price Hikes Hurt Some Track Rankings

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The big music news today is a report from Billboard on iTunes price changes and their negatively affecting chart positions for the top 100 songs.

Last week, iTunes introduced variable pricing, with some newer and more popular singles priced at $1.29 while other songs remaining at 99 cents and some older songs reduced to  69 cents. (Some have pointed out the difficulty in finding tracks at the lower price). The price increase is something the major labels had long wanted. Shortly after the increase, both Wal-Mart and Amazon switched to the almost identical increased prices.

From the Billboard report:

"Two days after the Apple iTunes Music Store raised prices on some
individual tracks, there was evidence the increases have hurt the sales
rankings of songs given the higher $1.29 price."

The report shows that 47 songs priced at $1.29 lost an average of 2.7 chart positions over the first two days on iTunes top 100 download chart. The 53 songs that kept the $0.99 price over the first two days saw gains of on average of 1.96 chart positions.

Now, it should be pointed out that looking at two days of sales of only 100 songs does not take into account the natural ups and downs of each song, a single that has been falling for weeks continually falling would not be a sign of an effect from a change in price. But the songs were pretty evenly distributed among songs that saw price changes and those that did not (47 songs prices raised to 53 held constant). It is likely that as many songs were rising up the charts as those falling across both groups, but not certain. It also needs to be noted that a small decrees in sales because of the raised prices could generate more revenue since the revenue collected for each track. The Billboard article does point both those points out.

The more interesting thing to see, that only time will tell, is how the prices changes effect sales lower down The Long Tail. It is foreseeable that more niche tracks from artists with more stable fans might see less drop in sales because there are less casual listeners to be scared off.

What I foresee happening is artists not liking the effect on their chart position. It must be hard for a major act, the kind that is running a single up the charts, to watch their single drop on the charts just so the label can generate more revenue that the artists won't see anyway. I expect a lot of the bigger managers will start having fights with their labels over prices in the near future, if it has not already started happening.   

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