New label pacts seed Apple

ITunes reups with majors

The music industry’s four major distributors — EMI, Sony BMG, Universal and Warner Music — renewed contracts with Apple Computer on Monday to continue selling songs through the iTunes musicstore.

Contracts do not cover any specifics regarding pricing, but Apple said it will keep its pricing the same as it has been for the last three years.

“We’re pleased to continue offering iTunes customers music at 99¢ per song from a library of over 3 million songs,” Apple said in a statement.

No details of the length of the contract were available Monday.

Apple’s statement comes a few months after the music companies and Apple were sniping at each other over the merits of variable pricing. When senior executives spoke in favor of higher prices for more popular works and discounts on older or less-popular tunes, Apple’s Steve Jobs contended that variable ricing will only drive up P2P piracy. Execs have also feared that once these negotiations were complete, Apple would implement its own variable pricing.

Like any brick-and-mortar retailer, Apple is given a range of wholesale prices, which average about 65¢ per track. In recent years, big-box stores such as Best Buy have used CDs as loss leaders, charging less than wholesale prices to pull in customers, though no one has used that approach in the digital marketplace.

Napster, which runs on a subscription basis, began a free service Monday that will generate revenue through advertising. Napster will split advertising revenue with record companies based on the number of times an artist’s songs are played.

ITunes represents more than 80% of the digital downloads sold in the U.S.

In late December, New York Attorney General Eliot Spitzer launched an antitrust probe of record labels’ digital-music pricing. No findings have been released.

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