Who benefits from iTunes price increases?

Apple’s iTunes recently raised their prices from $.99 a song to $1.29 for songs that are popular. Just the principle of price alone makes it an awkward purchase. At the $.99 price, the psychology of well it’s just a dollar would make for quick and impulsive purchases. But with the cost going up even just to $1.29 it does make the purchaser think twice.

In a recession, how does Apple account for the price increase? Well some have suggested that the price increase is due to updating DRM protection, which lowers the quality of sound delivered to customers. Others say it plainly…greed.

One person not making more money are the artists. They have fixed residuals for music sales and price increases don’t affect that.

A recent study of 10,000 students at The University of Arizona , said that paying $1.29 has lowered 63% of the student faculty’s desire to purchase music online.

“Since music is ultimately the same wherever you buy, it doesn’t make sense to pay top price at iTunes if you can get the same music for a fraction of the price elsewhere,” says Richard Parker, an alumni economics student who admits he stopped buying from iTunes & Napster because of the price hikes.