Amazon Undercuts iTunes With 69-Cent Pricing on New Release MP3s

[MacRumors]

As noted by the Los Angeles Times, Amazon has taken Apple's iTunes Store head-on in the digital music marketplace with its new feature of 69-cent on popular new release tracks. The new, lower price marks a substantial discount from iTunes, which typically charges $1.29 for current hits.

The Seattle online company is now pricing select top-selling tunes for 69 cents, down from 89 cents previously. Many of the songs in Amazon's 69-cent store sell for $1.29 on iTunes, including Katy Perry's "E.T.", Jennifer Lopez's "On the Floor" and Lady Gaga's "Born This Way."

The report notes that Amazon has been stuck at about 10% of the digital music download market for several years, finding itself unable to eat further into Apple's dominant position with iTunes.

Apple initially used a standard $0.99 price point for iTunes Store music content, but shifted to a tiered pricing model in April 2009, with much of the store's content remaining at the original $0.99 price point but certain popular content bumped up to $1.29 while older back catalog material in some cases dropped to $0.69. Amazon and Wal-Mart quickly followed suit with their own tiered pricing models.

Apple's shift to tiered pricing was made at the request of major record labels seeking more control over content pricing and was part of the negotiations that led Apple to be able to offer its entire iTunes Store music catalog free of digital rights management (DRM) restrictions.



Article Link: Amazon Undercuts iTunes With 69-Cent Pricing on New Release MP3s

 

[alent1234]

can anyone tell me why this market is so important? even at .99 cents a song the margins for the retailer can't be that much.

 

[Full of Win]

Competition = Good Thing



I disagree with this....

with much of the store's content remaining at the original $0.99 price point but certain popular content bumped up to $1.29 while older back catalog material in some cases dropped to $0.69

Its been my observation that most of the prices on existing content was increased to 1.29. I don't have hard number to back this up, just my observation that most of the content was bumped to the higher price point from being at 0.99 before.

 

[Surely]

Oh good. I like lower prices.

When I buy music, I typically buy from Amazon anyway. Their prices almost always seem to be cheaper than iTunes for the music I buy.


/would not buy or listen to anything by the artists listed in the above article. Just sayin'

 

[Dr McKay]

Oooh things are heating up

I'm not gonna buy music from Amazon again though, I downloaded 1 song for my Dad once from there. Because iTunes didn't have it, and Amazon emailed me for weeks with spam.

 

[Surely]

Oooh things are heating up

I'm not gonna buy music from Amazon again though, I downloaded 1 song for my Dad once from there. Because iTunes didn't have it, and Amazon emailed me for weeks with spam.

Just change your Amazon account settings. The only emails I get from them are to tell me if an order I placed has shipped.

 

[3N16MA]

Competition = Good Thing

Thank you for that revelation. My eyes have been open.

 

[solafide]

I wonder...

I wonder if this new pricing scheme is being enabled by the record labels with lower wholesale pricing to Amazon (to try, yet again, to take power out of Apple's hands), or if Amazon is simply doing this at a loss?

Why would Amazon want to take a loss - to support non-Apple mp3 players?

For Apple, they are not making much, if any money - they always planned it as a break-even business - the real value was the content eco-system tied to their products (= value for customers).

 

[allpar]

Personally, I dislike the idea of buying market share by taking a loss, which has long been Amazon's strategy. Nor do I like MP3s, in general, versus AAC. iTunes will continue to have higher sound quality...

 

[ppc_michael]

Cool!

I wonder if this is part of the labels' strategy to take power away from iTunes.

 

[joekun]

Wirelessly posted (Mozilla/5.0 (iPhone; U; CPU iPhone OS 4_3_2 like Mac OS X; en-us) AppleWebKit/533.17.9 (KHTML, like Gecko) Version/5.0.2 Mobile/8H7 Safari/6533.18.5)

I think amazon should use a better compression format, but at nearly half the price the same song on iTunes, apple has a tough sell.

 

[Lesser Evets]

CDs are generally around $10-$13 in stores. Downloads at roughly the same price are a rip(10+ songs per CD). $.69 is right for me. Hello, Amazon.

 

[Luman]

Quality = Out the Window

I haven't bought a single song from Amazon, not because I'm against them (I luv my Prime membership), but because they only sell MP3's that simply don't sound as good as an AAC file at an equivalent bit rate. Dropping the price to 69 cents doesn't improve the quality of the product and that's not good enough for me.

Viva la FLAC! Viva la Apple Lossless! Viva la.. um... AAC!

 

[jdechko]

Katy Perry's "E.T.", Jennifer Lopez's "On the Floor" and Lady Gaga's "Born This Way."

If those are the songs Amazon is selling then Apple doesn't need to worry about losing my business.

 

[iLucas]

I don't even think .99 for a song is that bad. But .69 is even better!

 

[DeaconGraves]

can anyone tell me why this market is so important? even at .99 cents a song the margins for the retailer can't be that much.

It's the battle for your credit card.

Both Apple and Amazon want to be your one-stop shop for media. If you're purchasing your music from one of them, they hope that you'll also purchase your movies, tv shows, and e-books from them as well.

Amazon has an even greater incentive because of everything else they sell. They'll gladly take a profit hit on a song if it means that buyer will come back and buy a stereo (or an iMac!)

 

[gnasher729]

Apple pays 70% straight to the record companies, which would be $0.90. If Amazon pays the same, then they have $0.21 loss before they even start. Or Amazon gets different prices than Apple, which would need some explaining.

 

[ten-oak-druid]

I think the Amazon mp3's are of a lower bit rate though. I have a few and that was the case. Perhaps that has changed.

I stil prefer to own CD's and import them. Generally I can find the CD for less than the full album on-line. But I do by from itunes or amazon when I only want one song from an artist.

 

[ChazUK]

Consumers win.

 

[TheNorthWaves]

considering that amazon sells mp3 format and apple sells their non-universal format, it still doesn't matter to me. Until apple gets real and starts selling MP3s I will continue to buy from amazon. But I guess they don't care.

 

[blahblah100]

Apple pays 70% straight to the record companies, which would be $0.90. If Amazon pays the same, then they have $0.21 loss before they even start. Or Amazon gets different prices than Apple, which would need some explaining.

How so? Why would there need to be some explaining, if this was the case?

 

[Blakjack]

Amazon knows something that we dont

 

[Rodimus Prime]

can anyone tell me why this market is so important? even at .99 cents a song the margins for the retailer can't be that much.

well per song not much but it adds up fast. Even if Amazon and Apple only bring in 10-15 cents per song at .99 cents per song. That adds up fast.

Between Amazon and Apple I like Amazon better. Plus I get like 10 bucks a year in free song from Amazon for text books I buy threw them. It is a nice bonus and I can promise you doing that little give away has pushed me to buy more text books from Amazon proving they are the same price as lets say B&N or the campus book store but often times Amazon is the cheapest and I am running on my free Amazon Prime for student member ship 2 day shipping to boot.

Apple pays 70% straight to the record companies, which would be $0.90. If Amazon pays the same, then they have $0.21 loss before they even start. Or Amazon gets different prices than Apple, which would need some explaining.

depends on the song what Apple and Amazon pays.
But as for the explain why Amazon would get a lower price. Record company hate the control Apple has and they are trying to break it and chances are Amazon has other options for those same record company to sell products threw them. like CD and if they owned or own other companies that sell complete different products like Sony which sells TV, dvd players ect.

 

[levitynyc]

Remember when tiered pricing was announced, Steve said more songs would be available for $.69 than $1.29...I have yet to see a $.69 song.

 

[Digitalclips]

Desperation.