Amazon, Apple in music price war

Online music giants Apple and Amazon are duking it out in an MP3 price war, which looks likely to spill over into the mobile space.

Just as Apple introduces a three tier pricing structure, which will see some track prices drop as low as £0.59/$0.69, Amazon MP3 has hit back by reducing the price of its top 100 tunes to £0.29.

In line with previously announced plans, Apple has introduced a new pricing structure for single tracks, setting them at either £0.59, £0.79 or £0.99 in the UK and $0.69, $0.99 and $1.29 in the US. The company has also made the majority of its library DRM free.

By way of response, Amazon, which is the default music shop on the Android-based G1 handset from T-Mobile, has slashed some of its single track prices in the UK from £0.79 to £0.59. But whereas Apple is using its pricing structure to shift older catalogue material, Amazon is applying its low rates to new songs in the top 100.

In related news on Wednesday, consultancy KPMG claimed that that 49 per cent of mobile users worldwide would be willing to watch ads on their mobiles in return for free music, highlighting the desirability of music on the mobile as well as the potential for the mobile advertising model.