Apple Sticks With Dollar Downloads

Apparently, dollar downloads are safe -- for the time being anyway. Apple (Nasdaq: AAPL  ) has been victorious in pricing negotiations with the recording industry, so it can continue to charge its usual fees for music in its iTunes Music Store. It's been widely reported (for several years now; here's a flashback to 2004) that the recording industry would like to see more flexible pricing, with indications that digital downloading is catching on, but let's just face it: Apple's still got the right idea with its pricing.

Apple has been negotiating with the recording industry heavyweights -- that's Sony's (NYSE: SNE  ) and Bertelsmann's Sony BMG, Warner Music Group (NYSE: WMG  ) , Vivendi (NYSE: V  ) Universal's Universal Music, and EMI Group -- about wholesale pricing of music. In the long run, though, it appears that the continued popularity of Apple's iTunes and iPod products gave it an edge in the negotiations, and the recording industry has agreed to a continuation of the current standard.

Last year this time, on the exact same topic of digital download pricing, I was of the opinion that the recording industry executives ought to quit their whining about the pricing structure for iTunes; after all, this was the service that actually convinced many people to pay for digital music when piracy was easy and free. I remain of the opinion that the $0.99 per song and $9.99 per album standard is still what customers are willing to pay without drifting back into piracy (although Apple is rolling out innovative packages like video albums that should command premium prices).

The recording industry should realize that piracy continues to be a problem and recognize that they are part of the reason that some consumers don't feel much guilt about lifting digital tunes from unsavory sources. In spite of Apple's dollars-for-downloads model, piracy continues.

So despite all the good news about the public's willingness to pay for digital music, hiking prices on digital tunes may very well throw cold water on their nascent success. And of course, iTunes hasn't seen so much success for nothing.

Over the course of its existence, Apple has broken the rules more than once. To discover up-and-coming companies that aim to shake things up, click here for a 30-day free trial to Motley Fool Rule Breakers .

Alyce Lomax does not own shares of any of the companies mentioned.