Aside from the lack of DRM, the now-cheaper files also offer better quality (256 kbps AAC encoding) as compared to
regular iTunes files (128kbps). It remains to be seen how will iTunes users be able to upgrade their old tracks, now that the price matches the better versions. Everyone’s bet is on an upcoming upgrade tax (in various forms), because is hard to believe that Apple would let the upgrade go for free and to ask users to pay again for songs that they already own would be suicidal, both in terms of business and PR.
The price cut was to be expected, given the fact that rival companies are decided more than ever to move on Apple’s turf. Wal-Mart and Amazon’s offers feature DRM-free songs for some time and they charge even less than Apple. On Amazon, the price for individual songs ranges from 89 cents to 99 cents, with more than half of the featured songs priced at 89 cents.
Also, it’s not hard to guess that the drop aims to lure other music players to iTunes. Universal has recently unveiled Total Music, its own music service. Although its strategy is far different from Apple’s approach (a subscription service set to be supported by hardware makers and cell carriers), the iPod maker is not eager to wait and see if Universal’s project turns out to be a real competitor on the market.