Earlier this month, online music retailers like Amazon and iTunes switched to a new pricing system. Morning Edition's technology commentator Mario Armstrong joined NPR's Renee Montagne to talk about how the changes will affect consumers and the industry.
The new system means that retailers are selling some songs for one price and other songs for a different price. Many of the top hits cost consumers $1.29 instead of the more common 99 cents, but the highest price point is only available to the major labels at this time.
"For most services, around 69 cents are for old songs, 99 cents are for your newer songs, and then those that are considered 'popular' songs are the ones that are kind of at this premium price," Armstrong says. He says he's hearing lots of complaints about the premium price, as well as talk of shopping around at different music retailers — both online and on land — to get the lowest price. Armstrong says the new flexibility raises interesting questions about competition.
"Variable pricing opens up those discussions with the artist, with the music labels, with the distributors," he says. "You could start seeing price wars and sales and all types of things.
"Amazon had a competitive advantage for a good little while over iTunes, and that was they were offering digital music [Digital Rights Management]-free," he says. "To me, the bigger announcement is that iTunes has now gone DRM-free for all of their content."
Armstrong says that could level the playing field between the two biggest online players.
So, how do musicians feel about all this?
"They're tired of all this gizmology," Armstrong says. "They want to perform, create music, do their craft."
Armstrong says that some independent artists — those who aren't on the Top 100 lists — might be able to sell more music, because their prices may be lower than those of more established musicians.
"We're in a tough economy," Armstrong says, adding that bargain-hunters and recommendation tools at these retailers may actually end up pushing new artists to the top of the heap.
One New Record Puts It In Perspective
A new album that's been topping Internet download charts the past week is Sounds of the Universe, a new release from the 1980s band Depeche Mode. Talk about variable pricing: At Amazon, you can download the album for $3.99; on iTunes it will cost you $9.99.
Rob Levine, the executive editor of Billboard magazine, says some brick and mortar stores are selling a deluxe boxed set for $100.
"What economists call this is price discovery," says Levine. "Normal people call this, 'We don't know what the heck it's worth.' "
He says it's hard to figure out what a CD is worth these days. "On the one hand, you have a large group of people who think paying $15 for a CD is some kind of highway robbery, which I think is ridiculous," he says. "On the other hand, you have a lot of people who are standing in line to buy something for $100."
As for that $3.99 price, Levine says that's the industry trying to compete with the lowest price of all — free.