Responding to Competitors, Apple Drops Digital Music Prices

Apple on Tuesday lowered the prices of the unprotected digital music files it sells to consumers from $1.29 to 99 cents, the same price it had been selling protected digital music files. Apple had previously charged a 30 cent premium for unprotected "iTunes Plus" songs, claiming that they offered additional value. But with a growing host of competitors selling unprotected music files for 99 cents, the company had to respond to the rapidly changing market.

Naturally, Apple didn't position the price drop in quite that way, deciding instead on some tortured logic. "iTunes Plus has been incredibly popular with our customers and now we're making it available at an even more affordable price," said Apple vice president Eddy Cue, echoing last month's dramatic $200 price drop on the iPhone. It's unclear why a company would lower prices when the product in question was "incredibly popular," but no matter: Apple's unprotected music files are now priced identically to DRM-free tracks sold at Amazon.com and Wal-Mart.

Of course, the Amazon.com and Wal-Mart tracks still have one huge advantage over those sold by Apple. Those companies are selling unprotected songs in the universally compatible MP3 audio format, whereas Apple still sells its songs in the compatibility challenged AAC format instead. AAC offers better quality than MP3, but doesn't work on the same range of software and devices as MP3.

In somewhat related news, Apple on Tuesday also announced that it has finally reached an agreement with Orange, the French wireless carrier, to be the exclusive seller of the iPhone in France. Apple previously announced that O2 would be the exclusive iPhone seller in the UK, while T-Mobile will sell the device in Germany. The iPhone is expected to go on sale in Europe next month.

TAGS: Windows 8
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