iTunes variable pricing cited for slowing WMG music sales

Almost a year after Apple finally caved in to record labels' demands to institute variable pricing for music downloads available via the computing giant's iTunes digital storefront, Warner Music Group says it has seen its iTunes unit sales growth decelerate. In April 2009, Apple began allowing labels to raise per-track prices from 99 cents per download to $1.29 for current hits--labels were also given the latitude to price back-catalog content at 69 cents. But according to WMG, year-over-year "digital track equivalent album unit growth" industry-wide slipped to 5 percent in the fourth quarter, down sequentially from 10 percent in Q3 and from 11 percent in Q2. Warner's overall digital revenues (made up primarily from iTunes sales) increased just 8 percent in Q4, compared to 20 percent a year earlier. The Wall Street Journal reports that Warner CEO Edgar Bronfman Jr. nevertheless argued that the pricing change has been a "net positive" for WMG, but admitted that raising prices 30 percent during a recession wasn't necessarily the best move to make.

As of mid-2009, iTunes accounts for 25 percent of all music sales in the U.S., up from 21 percent the previous year and from 14 percent in 2007, according to market research firm NPD Group. Retail giant Wal-Mart accounts for 14 percent of all U.S. music sales between its physical CD sales and online sales--iTunes passed Wal-Mart to become the nation's largest music retailer in early 2008. Looking solely at digital music sales, iTunes represents 69 percent of all U.S. purchases, followed by Amazon MP3 at 8 percent.

For more on WMG's declining iTunes sales:
- read this Wall Street Journal article