Jan. 6 (Bloomberg) -- Apple Inc., the most popular source of music in the U.S., stripped copy protection from all the songs in its iTunes music store and announced plans to charge as little as 69 cents a track.

Under a new variable pricing plan, songs will cost 69 cents, 99 cents or $1.29 starting in April, with most albums going for $9.99, Apple marketing head Phil Schiller said today at the Macworld conference in San Francisco. He spoke in place of Chief Executive Officer Steve Jobs, who said yesterday that he is undergoing treatment for a “hormone imbalance.”

Apple had drawn criticism for using so-called digital- rights management, or DRM, on most tracks, prompting Jobs two years ago to make a public plea to music labels to change their licensing terms. The protections prevented customers from listening to music on unauthorized devices and limited the copies they could burn onto CDs. The company also faced competition from Amazon.com Inc., which charges as little as 79 cents a song -- with no copy protection.

While record labels liked having DRM, they also wanted variable prices, letting them charge more for popular songs, said Barry Jaruzelski, a partner at the consulting firm Booz & Co. in Florham Park, New Jersey. Until now, Apple sold most tracks for 99 cents each.

“Hot items can be priced higher -- that impacted the simplicity and elegance Apple always wanted in iTunes,” Jaruzelski said. The elimination of DRM and the new pricing plan means “each side getting something they wanted.”

Record Labels

About 8 million songs will be offered without copy- protection software as part of the iTunes Plus service starting today, Apple said. The other 2 million songs in its catalog will be available without such software by the end of March. Universal Music Group, Sony BMG and Warner Music Group will offer songs without copy-protection software. EMI Group Ltd. started offering such tracks on iTunes in 2007.

Owners of older iTunes songs that have DRM protection can upgrade to the non-DRM version for 30 cents a song, Apple said.

ITunes, introduced in 2001, has benefited from the popularity of Apple’s dominant iPod music player. The service now tops Wal-Mart Stores Inc. and Best Buy Inc. in total music sales, according to NPD Group in Port Washington, New York.

Amazon.com, which introduced its song-downloading service in 2007, ranks fourth in music sales, according to NPD.

Shares Fall

Apple fell $1.56, or 1.7 percent, to $93.02 at 4 p.m. New York time in Nasdaq Stock Market trading. The shares dropped 57 percent in 2008.

The company said last month that it won’t attend Macworld conferences anymore after this week. Apple shares often fall after its events because investors frequently want bigger announcements, said Gene Munster, an analyst at Piper Jaffray & Co. in Minneapolis. Even so, today’s presentation was “underwhelming,” he said.

“Apple made a statement that Macworld is not important and they showed it with the products they announced,” Munster said. Updated software, a new notebook and iTunes price changes are “nice, but not needle moving.”

Munster said he expects Apple to introduce new products this quarter, including a new version of the iPhone.

Schiller, filling in for Jobs, started off his speech by saying, “I can’t tell you how much I appreciate you all showing up,” drawing laughter and applause.

While Jobs was a no-show at the event, other Apple executives wandering the conference included Chief Operating Officer Tim Cook and chief designer Jonathan Ive. Jobs didn’t attend the conference today and isn’t expected to visit the show floor this week.

New ILife

Apple also added a new version of its iLife software, which lets users manage photos, make movies and create DVDs. The program now enables users to search for pictures using face- recognition software and has links to the Facebook social- networking site and the Flickr online-photo service. ILife’s music program, Garage Band, will teach users to play the guitar and keyboard, with virtual lessons by Sting and John Fogerty.

The company introduced a new version of iWork, software that competes with Microsoft Corp.’s Office. Apple today started a service called iWork.com, which lets users share documents online.

ILife is included with all new Macs and costs $79 for an upgrade, Apple said. IWork also costs $79, or $49 when purchased with a new Mac.

Apple, marking the 25th anniversary of the Macintosh computer this month, introduced a MacBook Pro notebook with a 17-inch (43-centimeter) screen. The computer is less than 1 inch thick and has a battery that lasts for up to eight hours. It costs $2,799, Apple said.

The Mac, introduced in a 1984 Super Bowl commercial, remains Apple’s biggest moneymaker, accounting for about 44 percent of sales.

Singer Tony Bennett closed the event with two songs --“The Best is Yet to Come” and “I Left My Heart in San Francisco” - -earning the event’s only standing ovation.

To contact the reporter on this story: Connie Guglielmo in San Francisco at cguglielmo1@bloomberg.net

Last Updated: January 6, 2009 18:20 EST