SAN FRANCISCO — With the lure of every song for 99 cents, Apple Inc.'s iTunes upended the retail establishment to become the nation's top music seller in less than six years.
But the digital media powerhouse said Tuesday it would follow one of the oldest tenets of capitalism: The more someone wants something, the more you can charge for it.
Apple finally bowed to a long-standing recording industry demand and agreed to sell music downloads at three prices -- 69 cents, 99 cents and $1.29. Starting in April, iTunes customers may pay the top price for a hot new track such as Beyonce's "Single Ladies" and barely half that for a long-forgotten song from Air Supply.
The Cupertino, Calif., company claimed some victories of its own Tuesday. Freeing 10 million songs from their digital handcuffs, Apple said it had persuaded the major labels to drop their insistence on copy protections that restrict the number and type of devices that can play songs bought through iTunes.
It also received permission to sell downloads directly to the iPhone 3G via AT&T's high-speed cellular network.
But Apple's concession on pricing marks a victory for the music companies, which are desperate to stimulate digital download purchases as CD sales plummet. Consumers bought a record 1.07 billion music downloads last year, according to research firm Nielsen SoundScan, but those gains failed to offset the nearly 20% drop in traditional album sales.
"Variable pricing is all about trying to get the most that you can without losing customers," said Sucharita Mulpuru, a retail analyst with Forrester Research.
The trio of music announcements came near the end of the keynote speech by Apple Senior Vice President Philip Schiller at the Macworld Conference & Expo in San Francisco. It was the first time in 11 years that the keynote was presented by someone other than Apple Chief Executive Steve Jobs, who revealed Monday that he was recovering from a hormone imbalance that has caused him to lose weight.
When Apple launched iTunes in 2003 with the 99-cents-fits-all price, it was hailed as a breakthrough for simplicity. At the time, many online music services offered complicated terms that sometimes involved monthly fees and a limited number of downloads.
The iPod digital music player also boosted the profile of iTunes, which surpassed Wal-Mart, Target and other traditional music sellers by last year, according to research firm NPD Group.
