A few weeks ago, the New York Times had a story about the battle between Apple CEO Steve Jobs and the music industry. Apparently, the music industry wants to hike the price of a downloaded song by 50% to $1.49 while Jobs wants to hold the line at 99 cents to keep demand strong for iTunes. Given this fight, how does $1.99 to apparently download a song to the new iTunes wireless phone fit into the strategic scheme of things. Have the wireless and music industries over-estimated the buying power of teenagers, or are they way too anxious to find a new way to boost revenue? While I think a standard fee of 99 cents for an online music download is too high - particularly for most older material - $1.99 for a wireless iTunes download seems downright greedy. Then again, it's been a long time since I was a free-spending teenager so perhaps there's more money among the younger demographic than I realize. At the same time, never under-estimate the music industry's ability to read the market wrong.
Update: For Canadians anxious get hold of the iTunes phone (otherwise known as the Motorola ROKR, which is apparently pronounced as "Rocker"), it will be available through Rogers by mid-September. The ROKR can hold up to 100 songs. According to Solutions Research Group, 50% of MP3 players hold less than 100 songs. As a result, SRG suggests there is a fertile market for a "limited capacity" mobile phone/digital music player. Yannick Laclau thinks the additional iPod mobile fee is not outrageous because it is "the value a consumer will be willing to pay to get the song they want NOW, at a bus station, nightclub, beach, or wherever." I guess it's like paying a premium for a milk at a convenience store that stays open late.
Apple also announced a new iPod called Nano, which is 80% smaller than the original iPod. Nano comes in two flavours - a 4GB model that holds 1,000 songs for $249 and a 2GB model with a 500-song capacity for $199.