iTunes responds to Amazon download war… by INCREASING cost of new music by 20p



New releases on iTunes will rise to 99p from today, bucking a trend among rivals to slash prices in a bid to secure a larger slice of the download market.



While Amazon has dropped the price of songs such as the current No.1 - Lady GaGa's Poker Face - to 29p, Apple has upped the price up to 99p.



Under the company's new three-tier pricing scheme the iTunes online music store is now selling downloads for 59p, 79p and 99p.



Amazon has dropped the price of hit songs including Lady GaGa's Poker Face and Lily Allen's The Fear to as little as 29p



Apple downloads will also now be digital rights management (DRM) free, which means songs can be played on all types of music players.



The move comes a day after Amazon dropped the price of more than a hundred top-selling titles.



The online retail giant is offering some of their top songs for 50p less than market leader Apple in a bid to woo customers away from their rivals.

Amazon have made more than 100 tracks available on their website at the bargain price of 29p, including Lily Allen's hit song, The Fear.

Amazon, which began life selling books online, have also included rock, classical and jazz tracks in the promotion.



They have also been offering albums for as little as £3 - the average price on Apple's iTunes website is £7.99.

Lenny Kravitz songs play on Apple Nano media players. Tunes will now cost 99p

Meanwhile the majority of iTunes top sellers, including Calvin Harris's I'm Not Alone and Beyonce's Halo, were still on offer today at 79p.

Only one of iTunes top 50 selling tracks was being sold at the cheapest price of 59p - Metro Station's Shake It.

Apple chief executive Steve Jobs said the price tier would be based on what music labels were charging Apple, which means new releases often fall into the 99p bracket.

Experts said Amazon's price drop was good news for the online music industry.

Tom Dunmore of gadget magazine Stuff said: 'This is really the first serious competitor to Apple's dominance we've seen.



'I think this could see the start of a price war, and Apple maybe forced to counter with its own promotions.



'Over­all, this is great news, as consumers are only going to see prices drop.'

Amazon launched its download service last year and its catalogue now boasts more than five million tracks.



In the U.S., the company is tapping into a new market for electronic books and has launched an e-book reader called Kindle.

Most downloads in Britain are selling for something between 59p and 79p.

Apple has a catalogue of more than 10 million songs and still has by far the largest share of the download market.



In the six years it has been up and running it has sold more than six billion songs worldwide.

Julian Monaghan, head of music buying at Amazon.co.uk said the company always aimed to offer the lowest prices and comprehensive choice.



'Since our launch four months ago, we have been presenting our customers with some great deals on MP3s whilst rapidly expanding our catalogue and we will continue to do so going forward,' he said.



Amazon downloads will be compatible on both iPods and iPhones.



Both Apple and Amazon face now have to compete with online sites which allow users to stream music on their computers without buying the tracks.



