Infinite Loop / The Apple Ecosystem

Early trends suggest higher iTunes price means lower sales

Songs in the Top 100 that went up in price last week saw drops in chart …

Songs on iTunes Top 100 chart had a significant dip in chart position if the price went up to $1.29 last week. This conclusion is based on analysis of chart positions by Billboard immediately following the introduction of multiple pricing tiers in the iTunes Store. Though early analysis suggests that the higher price can mean significant drops in unit sales, many songs may make up the difference in increased revenue due to the higher price.

Industry song-ranking stalwarts Billboard took a look at the iTunes Top 100 chart for the two days following the launch of tiered pricing on the iTunes Store. Over that two-day period, songs priced up to $1.29 tended to drop in chart position, an average of three places. Songs priced at 99� tended to rise two positions.

Of course, with a 30 percent price increase, that means that some songs may be more than making up the difference in the lost sales. For a song to start feeling a negative impact on revenue, it would have to lose 23 percent of unit sales. At the lower end of the chart, differences in chart position rarely account for more than a few percentage points difference in unit sales, so the increase in revenue is mostly a net positive. However, chart positions in the top 10 can have enough of a difference to actually result in a net loss of revenue.

The changes in sales due to pricing suggest to us that the 99� price point is still easy to justify in the mind of a consumer for a casual purchase. If you heard a popular song on the radio, on TV, or in a movie, it's easier to click on "Buy Track" at 99� than $1.29. Further analysis is needed, however, to see if the higher prices affect consumer buying patterns in the long run.

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