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 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.