Apple will no longer sell all music on iTunes just for $0.99?

According to the Reuters report, Apple Inc and major music brands are betting that the implementation of three-tier pricing at the iTunes Music Store will boost music sales with a new mix of song-based packages and give consumers more options.

Apple will introduce its new three-tier price points at 69 cents, 99 cents and $1.29 on Tuesday. It’s well known that since opening in 2003 all songs in the iTunes store have been priced at 99 cents.

Previously music brands were disputing with Apple, arguing that songs should be priced differently to reflect their perceived value by consumers instead of 'one price fits all' strategy. So, finally brands managed to carry their points. 

The executives reported to Reuters that anticipating customer’s backlash against price increases, that for every song they raise to $1.29 they will be reducing 10 songs to 69 cents. They also add that the major benefit of the new pricing is flexibility to create new digital products beyond the album. Thus for example, a brand could sell a brand new song and its music video for $1.29 or package it with a ringtone. The lower pricing could eventually mean that iTunes can sell albums at more competitive prices though early indications are that album prices will not change right way.

So major brand owners, like Vivendi's Universal Music Group, Sony Music, Warner Music Group and EMI Music, say they can make more money with more flexible prices and try to make music sales a profitable enterprise again.

According to NPD Group, 87 % of digital music buyers in the U.S. used iTunes to download music in 2008compared to only 16% who used Amazon.com's digital music store. Apple has already been experimenting with new packages at different prices. In February it teamed with EMI Music to announce the first iTunes Pass with Depeche Mode, offering fans the album, exclusive singles, remixes, video and other content for $18.99. The new lower 69-cent song offering is supposed to boost sales of catalog music, described as older songs and albums released about 18 months or earlier. 35 to 40 % of iTunes music sales are of catalog songs and albums, and that share is growing as labels digitize more of their older songs.