Tyler Cowen today asks: why are all iTunes songs the same price? This is a good question because it is clearly the case that some songs are more popular than others and indeed have differential quality (see this CNN story today). All indications are that the real reason is as basic as: Apple wants simplicity so it can sell more iPods even if the music companies would like to be able to say more about pricing levels.
Of course, we should remember that while Apple practices this policy within countries, it does not between them (so much so that you could construct a currency index based on the differentials). But this is more support for the simplicity story than against it.
But when it comes down to it, if a one price fits all model is profit maximising, it implies that, from Apple’s perspective at least, the price elasticity of demand for each song is the same at current demand levels. [Of course, I am assuming here that Apple is paying the same royalty per song for each song]. And Apple from time to time have free song downloads so maybe they have assessed that this is not too far off. One day, my empirical colleagues might be able to sort that out.