New Madonna for $3.99? Amazon Takes Aim at iTunes With Variably Priced MP3s

June 18, 2008 12:18 PM ET

Last year, NBC CEO Jeff Zucker complained that Apple "destroyed the music business in terms of pricing" by sticking to its guns on the 99-cents-per-song model. But now entertainment execs might be landing some payback, in the form of Amazon MP3. This week, the online-shopping powerhouse's DRM-free download store announced two ongoing discount promotions, called "Daily Deals" and "Friday Five," and both feature big names at basement prices. But the trade-off for labels sick of iTunes pricing is that some tracks at Amazon MP3 cost more than the standard 89-99 cents (a seven-minute track from Coldplay's Viva la Vida is going for $1.94).


Amazon MP3's "Daily Deals" offers popular titles at a hefty discount, while "Friday Five" unloads five classic albums for $5 weekly from Friday to Sunday. In honor of Coldplay's recent release, "Daily Deals" offered X&Y for $1.99 on Tuesday, A Rush of Blood to the Head on Wednesday for $1.99, Parachutes on Thursday for $1.99 and Brothers & Sisters on Friday for 99 cents. Similarly, Madonna's Hard Candy, which is still going for $13.99 on iTunes, was recently a "Daily Deal" at $3.99. The "Friday Five" selections are equally tempting: This week, The Rolling Stones' Let It Bleed can be had for a single Lincoln, and you don't have to worry about ripping it to your iPod, because it's already in DRM-free, digital form.

So where does this leave Apple, who has been tussling with the labels for a while over the strict iTunes pricing model? The labels want demand-based prices and Steve Jobs likes his one-size-fits-all approach, but sustaining it has been another story: Apple lost NBC over the disagreement, but inked a deal shortly after with HBO on variable pricing of its cable shows. Now that Amazon has thrown its digital hat into the ring with daily discounts, it's going to be harder for iTunes to keep its stranglehold on the downloading business. Especially now that Amazon is making music-surfers offers they can't refuse.

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