The music industry seems to want Apple to inflate iTunes prices.

Apple is scheduled to reach new deals with each of the major labels early next year, and some music industry head honchos want to draw more dollars through digital music services.

The New York Times reports that two of the four major labels want to force Apple to be "more flexible" on price. In effect, they want to be able to charge more for popular releases, less for some releases, and some control over promotional prices.

Flexible profits

Many commentators point to the flexible pricing model within iTunes Japan as an example of what the future of digital download tariffs will be.

But even within the music industry, there's a divided congregation on digital price, with some executives concerned that raising prices now will simply drive music fans back to peer-to-peer music theft.

The report claims that some executives are unhappy because Apple is able to generate good profits from iPod sales, with support from iTunes.

In other words, Apple has two income streams within the business, while they only benefit from music sales.

Sony BMG US CEO Andrew Lack expects to discuss relations between his company and Apple in autumn, but did say: "I think Steve has done a great job on behalf of the industry and in the months ahead we have lots of challenges to conquer together."

Too early to act

Gartner G2 analyst Mike McGuire counsels caution in price, warning: "It would be a mistake to try to destabilize (iTunes) because it is one of the few bright spots in the industry right now".

Executives at Universal Music are reported to be in support of Apple's current price structure, while those at EMI are said to be in favour of more price variaton, but not interested in a fight.

Jimmy Iovine, chairman of Universal's Interscope Records said: "We need to convert a lot more people to the habit of buying music online. I don't think a way to convert more people is to raise the price."

Interoperability remains a focus

Interoperability - the desire to make Apple support more third-party devices and services with its proprietary digital rights management system, FairPlay - is also a bugbear for labels, it appears.

Former CEO of the Recording Industry Association of America Hilary Rosen said: "If Apple opened up its standards, it would sell more, not less."

McGuire warned that Apple is unlikely to acquiesce without a fight.