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Tuesday, May 02, 2006
Apple, Stick With 99 cents per iTunes Song

Apple has renewed contracts with the world's four largest music companies to sell songs through its iTunes Music Store, after blocking their attempts to end iTunes' flat-rate pricing scheme, Apple said on Tuesday.

Apple Chief Executive Steve Jobs argued that offering songs for a single price -- 99 cents in the United States, 79 pence in Britain -- was essential in weaning consumers off the illicit downloads that have ravaged the music industry.

"If they want to raise the prices, it means they are getting greedy," Jobs said in a press conference last year. "If the price goes up, they (consumers) will go back to piracy and everybody loses."

Of the world's biggest music companies -- Universal, Sony BMG, EMI and Warner Music -- all but Universal had pushed for variable pricing to maximize revenue from hot artists.

But in the end Apple had more negotiating power because of the dominance of its intertwined iPod player and iTunes service.

The iTunes Music Store has a market share of about 80 percent in the United States and also leads most European markets. Globally, digital music sales more than doubled to $1.1 billion in 2005, making up about 5 percent of industry revenues.

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