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iTunes price rise a cert - EMI boss

A dollar too short

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EMI Music's chief executive Alain Levy has said that there's now a consensus that the price of hit songs will rise on digital download sites. Apple charges 99 cents per song on its iTunes Music Store regardless of the song's popularity - something that the industry is keen to change.

"There is a common understanding that we will have to come to a variable pricing structure. The issue is when. There is a case for superstars to have a higher price," Levy told the Wall Street Journal.

Variable pricing will mean the cost of some, less popular songs, will come down. Apple unilaterally imposed the 99 cents per song fee by refusing - according to popular legend - to sign the terms offered by the major labels. Then it went ahead and launched the iTunes Music Store anyway, riding a Shock and Awe publicity campaign, and effectively daring the labels to pull out.

(We've been able to confirm or deny this version of events, but it's an oft-told story).

The labels and the download sites have been at loggerheads ever since. Microsoft was reported to have pulled out of negotiations entirely with the Big Four labels.

Last month a top music business lawyer called for the labels to withdraw their support from iTunes altogether.

"What if Jobs says 39 cents or 29 cents per download - what then? The industry can say, OK, we'll cut him off - very few people people buy music from digital downloads... [Jobs] will figure out another model," said attorney Ken Hertz, who represents Alanis Morrissette and other artists.

However Hertz doubted that the even if the labels wanted to withdraw from co-operating with Apple, they'd be able to carry out this threat.

"My point was that if Apple were to insist on a lower price, it is unclear whether the industry would even be in a position to 'cut Apple off,' he explained. "The industry may have no choice but to take what it can get, rather than cede the paid download business altogether", he told us today. Hertz is an advocate for flat fee collective licensing.

But there's also a seismic tension resulting from the unilateral imposition of 99 cents per song that has yet to be resolved.

Artists, represented by music publishers, take home only around 6 cents from every 99 cents sale, with recording rights holders earning around 65 cents. So the brave new world of digital distribution has perpetuated the inequities of the old model, dashing a decade of hopes. It's a complicated picture because the major labels also own the major music publishers.

But in the end, something's got to give. ®

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