THE 69-CENT STRATEGY: SINGLE PRICING, MULTIPLE USES

If you’re not watching the pricing on the iTunes singles chart—specifically, which songs are priced at 69 cents and which are $1.29—you’re missing a glimpse at major-label strategy regarding the breaking of new releases.

The low pricing can create a loud noise—within the label and throughout the biz—as a song flies up the iTunes chart, as well as providing access to the coveted real estate on the iTunes store’s front page.

Everybody in the business believes massive hit radio singles drive streaming. Top execs say manipulating the price of a track and driving it up the iTunes chart can help pump up that airplay.

A higher iTunes position can feed the perception that a new release is breaking. Radio looks at the iTunes chart for positive reinforcement regarding the actives prior to the callout research, which can take at least four weeks. If a song that’s On the Verge at iHeart doesn’t translate to sales, a chill goes through the heart of the SVP of promotion—who can probably expect a call from Tom Poleman saying, “Thanks for putting me on that stiff.”

For the players who use it, the 69-cent tactic has several uses. It can be used to create a secondary burst after a track’s strong initial flurry and decline, as it gains fans over time. It can be used to achieve chart manipulations at the top, as songs battle for #1 on the Hot 100 and other charts. It can be maintained over the long term for breaking new acts, where the lower price pushes consumers to take a chance. With songs that are strong in the streaming world but not selling initially, strategic pricing that drives a track up at iTunes demonstrates its broader strength to radio.

According to many—though by no means all—it’s an important tool in the toolbox. Not all companies use this tactic equally; Atlantic, Republic, Interscope, Capitol and Island clearly believe in the 69-cent model, while Sony’s labels use it rather sparingly. However, it should be noted that RCA reduced the price of Miley Cyrus’ “Malibu,” exploding it into the iTunes Top 10 as the fight at radio continues.

That said, more than a few label bosses and top-tier execs, as well as certain artists, believe that reducing the price diminishes the value of the music—and that if a song is a hit, it’ll sell at full boat.

Who’s right? That remains to be seen. We’ll keep watching the numbers.

Note: Imagine Dragons single was priced at .69 previously but was moved to $1.29 to coincide with album release.

Click on chart graphics for a larger view.