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iTunes ditches DRM, plays with prices

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First, the good news: Behold! Apple has finally come around and unleashed the DRM-free mp3 on its iTunes store. The tech titan has announced a three tier purchasing option to secure its place as the top seller of mp3s.

Back in January, at the MacWorld Expo Convention, Apple took some time after boasting about its six billionth download to unveil a plan to sell DRM-free mp3s starting in April. Well, now it’s April and that declaration has been realized.

Many of you may balk at this announcement, asking, “What took them so long?” And if you did, you had good reason. While Apple was wrangling with the big four record labels, Amazon.com, Emusic, and Rhapsody have punctured a hole in Apple’s weak underbelly. The restrictive DRM mp3s are not to be found in Apple’s biggest competitors. While Apple still maintains their number one spot in sales, something had to be done.

Now, the eh news: The three tier plan is Apple’s compromise with its consumers and the record labels. It is now left up to the labels if they wish to charge $1.29 for new releases, continue the traditional rate of $.99, or go down to a low $.69 a track. Buyers can also option a 30 cent upgrade to unlock their previous purchases. Apple discussed with The Washington Post an eventual upgrade for free tracks previously released as freebies.

To Apple’s dismay, this announcement may have come too late. Many of its customers have already abandoned the iTunes store and fled to Amazon.com where they can still buy most releases for less than the standard price of $.99. In spite of this, Anita Elberse, associate professor at Harvard Business School, advised Cnet.com, “We might lose some people that are dropping out because their reservation price is below $1.29, but we make up when we get 30 cents more from the people that stay. That is constantly the trade-off that you make.”

Unfortunately, a search in iTunes for songs sold at $1.29 – the ones that are supposed to make up for any losses – are hard to find. Their list of Top Songs, show a mere 46 tracks at the $1.29 tier. Want to find any songs on that list for $.69? Forget it. But one must give Apple a shot at this system. It is, after all, the company’s first push at the DRM-free mp3 market it inadvertently helped to create. In the past, we’ve seen the company adhere to its customers’ demands and buying trends and perhaps the future will be no different.

So, there you go…

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