iTunes Pricing Makes No Marketing Sense

You have to respect Apple- they clearly know a thing or two about marketing- but I really don’t understand their iTunes pricing policy. It makes no sense to me to price everything the same- every song 79p, every album (with rare exceptions) £7.90.

I can only think the strange kind of monopoly they have means they feel they can ignore basic principles of pricing as a marketing tool. Or maybe it’s because they operate in cyberspace where, with no physical stock, they don’t have the problem of being stuck with piles of unsold CDs.

Normally you would expect to offer a special low price on a new popular product so that you shift higher volumes at a lower profit. You might charge a higher price for something less popular because you are only moving small numbers and therefore cost per unit is relatively high. And of course you always want to knock out dead stock at bargain prices. None of this applies if everything takes up the same space on the server and costs the same to sell. On the other hand, wouldn’t a bit of price cutting help increase turnover?

That’s just looking at iTunes from a marketing perspective. CDs are often cheaper or more expensive because of the level of royalties payable or the promotional costs- hence some incredibly cheap re-issues of old recordings. How does this affect the business model of the record companies if every itunes sale yields the same return?

From a consumer’s point of view, how can Apple justify charging the same for a song which is out of copyright as one which is paying massive royalties to the recording artist? And, since cyberspace is so cheap, how do they have the nerve to charge £7.90 for an album which you could have in your hands and with a nice booklet for perhaps £8.99, when they incur none of the production, storage, distribution and sales staff costs associated with discs? We British may feel particularly aggrieved when you consider that in the US you pay 99 cents a track whereas in the UK you pay the equivalent of $1.50.

To a marketing person like me, this is adding injury to insult.