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I didn't even know iTunes had this price scheme, I have never bought a song there. Will have to check Amazon mp3 sales to see if they are doing the same, been a while since I bought something.
Yes, cheaper prices = more sales. On the other hand there is a sweet spot for companies. That is where you can sell fewer units, but have higher profits. Too high a price and you take to big a hit in sales. Too cheap, and you just don't make much. The are trying to find that sweet spot.
The consumer can of course control it, by what price point they refuse to buy. Companies are not completely stupid. Why sell an ebook for $9.99 if you can get $14.99? On the other hand, if sales drop too much at the $14.99 price point, they they will retreat.
My guess is it will work out for them. Most consumers will go along with a price hike if "everybody's" doing it. With Apple and Amazon on board, all the rest will have to follow. There are a few rogues like me that will use alternate means to get the products we want, but we are a small minority.
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