Well, that didn't take long.
Apple (Nasdaq: AAPL ) raised the ceiling in digital music, introducing variable pricing with songs available for as much as $1.29. And Amazon.com (Nasdaq: AMZN ) is following suit.
A quick stroll down Amazon's best-selling MP3s now includes a few singles breaking from the e-tailer's standard $0.99 price point to be offered at $1.29.
Most of the pricier tracks are newer releases like Kings of Leon's "Use Somebody" and Britney Spears' controversial "If U Seek Amy," though you will also find a few throwback classics like Journey's "Don't Stop Believin'" at $1.29.
Amazon's best-seller list is updated hourly, so we will quickly see if consumers are balking at the 30% price hike.
The ultimate payoff?
The one thing the move is likely to do is encourage MP3 album sales. Beyonce's I Am ... Sasha Fierce is a perfect example. The album's first two singles are now priced at $1.29, but the nine other tracks are still $0.99 apiece.
"Album Savings: $1.50 compared to buying all songs," Amazon claims, in promoting the $9.99 digital CD download. Buying all 11 songs would now come out to $11.49, rather than the old $10.89 math.
Digital music can use a catalyst, since the once-heady growth has been decelerating. Digital revenue at Warner Music Group (NYSE: WMG ) grew by just 20% year over year in its latest quarter, and only 2% sequentially.
The real shame here is that Amazon jumped so quickly to match Apple. Digital music retailers like Amazon and Wal-Mart (NYSE: WMT ) have historically priced their tunes aggressively relative to Apple. It would have been in Amazon's best interest to keep prices low at a time when iTunes shoppers are inclined to comparison shop.
The major labels would have benefited in the long term, too. Even if it would have meant losing some $1.29 sales to discounters, anything that nibbles away at Apple's market share places the labels closer to the driver's seat. Right now, Apple is the industry's drummer. Everyone else has to march to its beat.
But Apple may lose control anyway. Google (Nasdaq: GOOG ) is promoting an ad-supported download model in China. Teens are relying on social-networking sites as their musical Sherpas, with little reason to buy given the popularity of free streaming sites like CBS' (NYSE: CBS ) Last.fm or Google's own YouTube.
Still, you blew a golden chance to stand out in a crowd, Amazon. Let's hope you can make up for the lost opportunity in found digital album sales.
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