The Hole In Apple's iTunes Price Cut
Two days after Apple (AAPL) began cutting the price of its DRM-free music for new customers, from $1.29 a song to 99¢, the company is still charging the higher price for existing customers.
The fact of the 30¢ price cut was confirmed yesterday by Steve Jobs, although the company denied that the move was in response to competition from Amazon (AMZN), which charges 89¢ to 99¢ per song, or Wal-Mart (WMT), which charges 94¢. "It's been very popular with our customers, and we're making it even more affordable," both Jobs and spokesperson Natalie Kerris insisted.
But the price cut was not applied across the board. The discrepancy arises in the Upgrade My Library feature, which is still charging existing customers 30% extra for DRM-free songs.
For example: 
A new customer who buys Norah Jones' Feels Like Home on iTunes pays $12.99 for a 256 kbps, DRM-free version of album. That's the same price existing customers paid for a 128 kbps, DRMed version when the album first came out. To get the higher-quality, iTunes Plus version through Upgrade My Library, those customers have to shell out an extra $3.86.
Of course, there is no competition for Apple's Upgrade My Library feature. It's the one thing you can't do at Wal-Mart or Amazon.
However, Amazon sells a DRM-free, 256 kbps MP3 version of Feels Like Home for $8.99. They also sell the "Enhanced" CD for $12.97 new and $6.47 used.
Actually, I think what's being complained about is that the "Upgrade My Library" feature, which upgrades previously-purchased, DRM-loaded tracks with the DRM-free, higher bitrate iTunes Plus ones, still costs the 30-cents per track upgrade fee. I just went through the library upgrade for 156 tracks, and while it wasn't a blanket 30 cents per track it was $38.50, which was close enough.
ok this should be corrected….its not new USERS. Its new PURCHASES. Songs that were previously purchased will be charged to upgrade, but if you currently use iTunes and purchase music that you don't already own then those can be purchased DRM free for the new reduced price.
I had to read the article twice before I could convince myself that it wasn't complete fiction. The wording makes it sound like existing iTunes customers are being charged 30% more than new customers, but I can see how the article manages to be technically accurate even while implying something totally false.
It would be more kind — and arguably more correct — to say that people who already own the lower-quality Fairplay-protected version of a song or album can buy the new DRM-free higher-quality version at a 70% discount.
The link to this article from CNN Money says "Only new iTunes users get Apple's price cut"? That's extremely misleading. I have been using iTunes for years, I don't have Nora Jones' Feel Like Home CD and I can buy it for $12.99. Only people that have a couple songs and want to get the entire album have this problem, it has nothing to do with new iTunes users. Just thought the link was very misleading.
It is not a new versus exsisting customer issue. If one wants to upgrade previously purchased lower-quality DRM version tracks/albums to the higher-quality DRM-free versions, iTunes still charges to upgrade despite that the new price of the DRM-free version was equivalent to the original purchase price of the the lower-quality DRM version. But for albums, this has always been true since iTunes started offereding DRM-free tracks – the price to purchase an entire DRM free album was typically the same as the lower-quality DRM version, but if you already purchased the album, you had to pay to upgrade.
Please bear in mind that the audio quality of an AAC-encoded track (=iTunes) is noticeably superior to an MP3-encoded ona (=all the others
Mags, The article said "The discrepancy arises in the Upgrade My Library feature, which is still charging existing customers 30% extra for DRM-free songs."
That is correct, 30% on top of $.99 is $.30, so the DRM-free price would be = $1.29.
@Mags: $3.86 is 30% of $12.99. Please don't be so quick to criticize if you don't understand what it is you are critiquing.
Isn't a 30 cent reduction equivalent to 23% price reduction? The article only gets worse after that………..
No matter what, you just can not please some people. They will find *something* wrong with everything. What a miserable way to live.