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In response to a recently-published New York Post story released last Friday [Tim Arango, "Apple (Nasdaq: AAPL) Tunes Up," MacNewsWorld, May 7, 2004], Apple categorically denied that it had any plans to raise iTunes Music Store (iTMS) prices from US$.99 to $1.25 for chart-topping tracks.
Apple spokesperson Natalie Sequeira said Friday that the New York Post rumors were not true. She added that Apple already has multiyear agreements in place with the major record labels and that songs would remain $.99 each.
Quick Response
"I'm not surprised that Apple quickly responded to a potentially damaging rumor, particularly given that Steve Jobs had reiterated the 99-cent pricing about a week earlier," Jupiter Research analyst Joe Wilcox told MacNewsWorld.
"During the conference call for the iTunes Music Store first anniversary, Jobs said that the 99-cent pricing was firm, in response a question about rumors the record labels would demand more," he continued.
Wilcox went on to note that Jupiter Research survey's have shown consistently that 99 cents is the right price for singles. " If there is a sweetspot for pricing digital download singles, 99 cents is it," he said.
Ludicrous Action
For his part, Yankee Group senior analyst Mike Goodman told MacNewsWorld that he doesn't see Apple raising its prices because it would be detrimental to growing its iTMS business, adding that Apple is still in the early stages of developing its online product.
"As much as Apple has done and progress it has made, if you put [its success] in the big picture, 100 or so million sales 
of digital music overall in the last year (with Apple iTMS having 70 or so million of those) pales in comparison to the five billion songs downloaded illegally during same time period," Goodman said.
Goodman noted that raising prices makes no sense at this time and that doing so now would be "ludicrous."
"You're still really struggling to get people to adopt this mode," Goodman said. "Raising prices might not be beyond the thinking process of the record labels, but it would be coming from Apple."
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