99 cent downloads at iTMS. Much if not all of the discussion surrounding the “value” of a song at the iTunes Music Store has missed the real reason Apple is loathe to fiddle with the song pricing.

Steve Jobs argues that consumers don’t want price confusion and that 99 cents is the sweet spot for preventing a return to the online music piracy that was rampant with Napster and the like before the iTunes/iPod phenomenon took off. I think he’s got a good point.

At least some of the music industry big wigs favor a variable pricing structure with older songs costing less (as low as 29 cents) and new songs costing more ($1.29 is a commonly cited figure). At least one research analyst believes that Apple could raise the song prices from .99 to $1.29 with marginal impact on consumer behavior.

Variable pricing makes a lot of sense to the music industry. Their older catalog generates little revenue—especially at pricing identical to the new stuff—so if price reductions allow music companies to make additional revenue from what to them is a essentially a dead track, they’re happy to do it. Similarly, if they can derive more revenue from their newer stuff, they’re thrilled to do that too.

Apple’s problem with all this—and once again Steve Jobs is being a touch disingenuous—is that their costs are fixed. Specifically, whether Apple sells a song for 29 cents or 99 cents, the bandwidth costs—the cost to electronically ship the song to the consumer—are the same. According to the National Association of Record Industry Professionals (NARIP), Apple grosses 34 cents from every 99 cent download. (Labels get 55 cents and artists 10 cents.) Tack on credit card charges (typically 25 cents on a $1 charge), and it quickly becomes apparent that Apple couldn’t offer 29 cent downloads as anything but a loss leader. Indeed, although Apple has assuredly worked out a relatively favorable agreement with the credit card companies, it is exceedingly doubtful that a 29 cent sale would leave any revenue whatsoever for Apple. And that’s prior to calculating bandwidth costs.

As many of Apple’s music company contracts expire in 2006, we will soon see how the issue gets resolved. Personally, I expect that some companies will for a short time pull their catalogs from iTMS, only to return within a year or two. The iTunes/iPod cycle may be broken, but I’ve not seen any contenders on the horizon yet. I think record companies will discover that it’s much easier to play with Apple than against them, which is a good thing because Apple won’t be moving to variable pricing anytime soon.

Mac OS 10.4.2 Tiger. I’ve been running 10.4.2 for a month or two now, and this is my report. I love Widgets. And there are enough of them out there—over 1000 at last count—that you can probably find what you’re looking for if you’ve got a special need. And if you can’t find it, you can probably roll your own. They’re not that hard to create.

Spotlight hasn’t turned my crank. I love that it can do content searches within documents, but it’s rare that I need that, and the result is that I rarely use it. Maybe some other 10.4 user can show me what I’m missing since lots of folks seem to think this is the cat’s pajamas.

The system-wide Dictionary/Thesaurus is cool. I use it frequently.

Some of the applications (Safari, Mail, Address Book, iCal, etc.) have received nice updates. Nothing earthshaking in terms of features but pleasing nonetheless.

Ultimately, I think Tiger is a fine operating system that will be made better once they ship 10.4.3, a massive bug-fix update. It’s plenty usable at 10.4.2, but you can say the same for 10.3.9. In fact, I’m not convinced that Tiger is worth the upgrade from Panther (whereas I think that the upgrade from 10.2 Jaguar to 10.3 Panther is real deal).

The Mac Store. I have no idea what’s happened to the Salem Mac Store, but my dealings with them in recent weeks have really been shockingly poor. On the brighter side, they’ll still give you Apple Educational Pricing just for asking (and without having to provide proof, though I’m eligible through Erin). Without going into details, I’ll just say that I wouldn’t take my Macs to them for RAM upgrades. And I won’t take client Macs to them either. Draw your own conclusions.

SMUG.With Dave’s help I’ll be giving the feature presentation for next month’s Salem Macintosh Users Group (SMUG). That’ll be Tuesday, October 11 at 7 PM at Comfort Suites on Hawthorne in Salem. Free and open to the public. I’ll be there at 6:30 PM to answer questions at the Beginners’ Corner. My presentation is on QuickSilver, RSS, and Answers.com. Hope to see you there!