Apple lowering some iTunes prices and dropping copy protection

Apple unveiled significant pricing and copyright changes to its iTunes Store, at the Macworld Conference & Expo in San Francisco Tuesday. Changes include a new three-tiered pricing plan for songs, instead of the 99-cents fixed price Apple has used for most songs, and the end of copy protection from all of the songs it sells.

Some of Apple's moves appear to be a response in part to shifts in the digital-music market. Growth in paid downloads slowed significantly in 2008, rising 27%, compared with a 45% increase a year earlier.

New online-music rivals have also emerged, including Amazon.com, which sells many songs at a lower price than iTunes and without copy protection, giving users more freedom with the songs they have purchased.

The moves by Apple could prompt others in the online music industry to also explore new ways to sell music. Apple last year surpassed Wal-Mart as the world's largest music retailer. Digital-music retailers in the US sold more than one billion songs in 2008. Apple said it has sold six billion songs since the iTunes Store launched in 2003.

Under Apple's new pricing plan that will take effect in April, songs will cost 69 cents, 99 cents or $1.29. Apple said the "vast majority" of the songs will cost 69 cents, though people familiar with the matter said the most sought-after songs -- which generate most of the sales on the service -- will likely cost $1.29 as both Apple and the major record labels try to boost revenue growth.

Apple also said it is dropping digital rights management, or copy protection, from eight million songs in its catalog effective immediately, and from the remaining two million in its catalog by the end of March.

Apple's DRM has made it complicated for iTunes customers to use competitors' products, like SanDisk music players or Microsoft's Zune. Among the limits imposed by the software locks, it is difficult or impossible to play songs purchased from the iTunes Store on devices other than the iPod or iPhone.

Apple already sells songs from some record labels, including EMI Group and many independent labels, without DRM. Now it is moving to selling everything, including the catalogs of the other three major labels -- Sony Music Entertainment, Universal Music Group and Warner Music Group -- the same way.

Users can also pay 30 cents a song to upgrade previously purchased songs in their iTunes library to a DRM-free version.

Starting Tuesday, Apple said iPhone 3G owners will also be able to download songs from the iTunes Store via their cellular networks instead of having to connect to a wireless Internet network. The company said the price, selection and quality of the songs would be the same as they are online. (info from The Wall Street Journal)