Apple increases price of download singles to 99p

iTunes online music store introduced the three tier variable pricing yesterday and is now selling downloads for 59p, 79p and 99p.

Most songs used to cost a standard 79p.

Poker Face by Lady Gaga, as well as popular tracks by Beyoncé and Kings of Leon are now priced 99p.

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

The move comes a day after Amazon dropped the price of more than a hundred top-selling songs to 29p in an effort to capture a larger slice of the download market.

Whereas Amazon has dropped the price of songs such as the current UK number one, Lady GaGa's Poker Face, to 29p, Apple has raised the price to 99p.

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, but 18 of its top 100 are now priced at 99p.

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

Amazon's MP3 download site, which launched in December last year, now has more than five million tracks for sale.

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

Steve Jobs, Apple's chief executive, announced the price changes in January and said the price tier would be based on what music labels were charging Apple.

That means new releases will often fall into the 99p bracket.

Major labels called for flexible pricing in the belief the cost of the song should reflect how much a consumer was willing to pay and that it would make music sales more profitable.