Shock: When You Raise iTunes Prices, People Buy Less Stuff

A shocking revelation from Warner Bros earnings call this morning: Since they bumped prices on a bunch of iTunes music, growth has slowed down! Digital track growth dropped from 10 per cent in the fall quarter to just 5 per cent for this past quarter, which means less money - digital revenue grew less than half as much, 8 per cent, versus 20 per cent a year ago. Warner Music's CEO apparently conceded that raising prices during the recession was maybe not his finest idea.

The prudent point in this for book publishers, as Peter Kafka notes, is that raising prices like they wish to might slow sales down more than they think. The price difference between a $US10 book and a $US15 book is a gaping maw, so I wouldn't be surprised to see people react that much more vehemently. But we'll see - maybe people will pay more for fancy ebooks. [MediaMemo]

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