Consumers are reacting to price changes on iTunes, sending more expensive songs down the charts and giving a boost to tracks that stick with the old 99-cent pricing.
Last Tuesday, Apple rolled out its variable pricing system, raising the price of the most-demanded songs to $1.29, 30 cents above its old 99-cent price point. This weekend, Billboard's weekly sales charts were released, and the results were a little surprising.
On the iTunes Top 100 chart, 40 of the 100 songs had their price raised 30 cents at some point during the week, while the other 60 songs remained at 99 cents. The songs that hit $1.29 lost an average of 5.3 spots on the chart vs. the previous week, while the 99-cent tracks gained an average of 2.5 positions.
Billboard says it watched the trend on a day-to-day basis (Apple changes prices constantly throughout the week), and you can actually watch a song fall down the chart overnight after its price is raised. The average overnight chart position loss for a song that receives a price hike is 1.9 spots.
In the aggregate, however, Apple still seems to be making more cash now than before, because the increase in price is offsetting the loss in sales of those tracks. For tracks that fell on the charts last week, Apple nonetheless made an extra $1,100 a day on average thanks to the size of the price hike. And that is precisely the reason why Apple made this change in the first place, because it was leaving money on the table.
This is a new change and a market still in flux, of course, and both consumers and competitors are still reacting to the variable pricing. As well, price isn't the only thing (obviously) that affects where songs land on the charts, so it's important not to draw too many conclusions from this very early Billboard data. That said, it does look like iTunes price hikes are having an impact on sales, but not nearly enough of one to make people stop buying music. Since Apple is making more money now than before -- even if it's selling fewer songs -- this looks like a change that's here to stay.
Supply and demand at work, folks!