Since Apple granted music labels the flexibility to set individual song prices between $0.69 and $1.29 on the iTunes Music Store, growth of digital music sales has slowed, one music executive revealed Tuesday.
According to Peter Kafka at MediaMemo, Warner Music Group revealed Tuesday that it has seen digital music sales sales slow down since the price increase took effect in April 2009. Digital album downloads grew 5 percent in December, down from 10 percent in the September quarter and 11 percent in the June quarter. Digital revenue is slowing as well: Warner saw 8 percent growth in the holiday quarter, versus 20 percent a year before.
Warner CEO Edgar Bronfman Jr. reportedly said the pricing change has been a "net positive" for Warner, but conceded that a 30 percent price increase during a recession was not the best move.
Steve Jobs insisted for years against pressure from the music industry that .99 cents was the sweet spot for music pricing and that raising prices would stifle sales. But they insisted, and Steve traded price flexibility for removal of DRM. And it turns out that people aren't willing to pay $1.29 per track the way they were for .99 cents. [I'm leaving out the supposed .69 cent price point because in all my browsing of the iTunes store, I've yet to run across such a unicorn bigfoot track.]
Once again, music industry execs don't know jack about their customers or the market. I think we all saw this one coming in slow motion.
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