If it’s true that I can’t set the price to compete with the labels, then the labels are guilty of collusion and price fixing. Someone should look into that.
The music labels? Guilty of collusion? Price fixing? Never! It's just that all music is equally worthy.
This was genius because it puts the focus on the music... that is, the artist, the sound, the emotion... and not on pennies.
Do you really care if one track is $0.99 and the other is $0.91? Is that how you decide which album to buy?
Jobs had the challenge of convincing the industry that music could be sold online profitably, and to do that he needed to break the industry of its focus on the "hot new song" and the huge revenue boom that comes at the beginning of a song's life. Jobs knew that people would repurchase older albums that they already loved, and wanted to be able to afford to focus the store on all music, not just the 3 songs that are bringing in serious money this week.
The overall result has been that iTunes has tremendous selection and quality. Now, as there is more competition, iTunes does charge more for some songs, but I view this as a step backwards in terms of the psychological ease of making a purchase. Once the consumer is over the hump of believing that a song is worth $1, it's easy to just focus on love and emotion and enjoyment.
You are free to start a music store charging $2 or $50 per song, but you have a sales pitch to make to artists and labels in order to be able to compete with iTunes.
Actually, the labels hate iTunes $0.99 fixed price and want variable pricing.
The fixed price is Apple's condition.
While I'd like to think that variable pricing would lead to $0.10 songs, actual label behavior suggests that the floor would be at least $0.49 (highly unlikely), $0.75 (possible), and probably $0.99, with popular stuff going for $2.99.