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Apple's iTunes store enjoys something of a captive, cultish market, especially for those proud first-adapters who flaunt their iPhones and iPods. Paying a premium makes

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Apple's Recession-Era Gift to Amazon?

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Apple's iTunes store enjoys something of a captive, cultish market, especially for those proud first-adapters who flaunt their iPhones and iPods. Paying a premium makes you a member of the Steve Jobs club, which was fine for those who could afford it before the economy went sour. So it's a little strange, as The New York Times reports today, that Apple now wants iTunes customers to pay more than the old flat rate of 99 cents per song.

The new sliding scale goes from 69 cents to $1.29. That sounds like a bargain on the low end, but what percentage of the iTunes inventory actually sells for that much? As tech site Gizmodo observes with the apt headline "iTunes Tiered Pricing Goes Live, We Get Gently Screwed," Apple may only be offering the 69-cent deal on crap music. In keeping with its company ethos, it's chasing the higher margin in its niche. Which, as some commenters on both the Giz and NYT stories have observed, may steer consumers to Amazon's cheaper music download store. Jeff Bezos' Amazon.com, let's remember, has done very well in the current sucky economy by sticking to its company ethos: moving more products at a lower margin.

Which corporate strategy makes more sense in a recession? I'll leave it to music lovers/downloaders to decide--with their wallets.

Update: TechFlash says that Amazon now has 16 percent of the music download market, as compared to Apple's 87. (No, those numbers don't add up to 100 percent, but let's assume there's some rounding in the report cited from analyst group NPD.)

 
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