According to a notice published on Apple's site, the price is dropping from $1.29 for to 99 cents. This is now the same price as copy-protected songs on iTunes.

Apple's iTunes store showed the music industry that legal online music sales could work as a business, but now the digital outlet faces a string of major competitors.

Amazon, Wal-Mart, Universal

In September, Amazon launched its online music store, offering more than two million titles from 180,000 artists on over 20,000 labels, without copy protection. The prices range from 89 to 99 cents. Amazon said about half are sold at the lower price.

In late summer, Wal-Mart said that some of its unprotected songs would be sold for 94 cents. And Universal Music has reportedly approached Sony BMG, Zune-maker Microsoft , Warner Music, and others to join Total Music, a free music service whose monthly fee would be covered by mobile device makers and telecommunications service vendors.

Once the service is established and marketed, consumers would know that Total Music devices included a free music subscription.

Universal reflected the unhappiness of major record labels with iTunes when it recently refused to sign a new long-term contract, choosing instead to renew monthly. Reportedly, Apple has balked at record companies' requests for changing what it charges for songs and how it splits the revenue.

Beginning of a Price War?

While some observers see this as the first step in a price war, Jupiter Research analyst Michael Gartenberg said it isn't clear this is the case. It could just be "market forces," he said, making the kind of price adjustments that are normal for a maturing business model.

"We've known for some time that 99 cents is a sweet spot for consumers," he noted, with customer resistance beginning above a dollar. This type of price adjustment, he said, is the kind a company wants to make before it has to, when it does so from strength rather weakness.

Even at 99 cents, Apple might still be doing very well. Some industry analysts estimate that the company receives 29 cents on each 99-cent charge.

Gartenberg noted that these DRM-free songs would be at a higher bit rate than the ones that had been offered at 99 cents. Gartenberg said that, despite the major competition, he doesn't think a price war among online music services is imminent. "Below a certain price," he said, "you can't make money."