Apple has bowed to demands from music labels and introduced tiered pricing of iTunes tracks.
But it has also made its entire catalogue available DRM-free.
The company has reached arrangement with all four major music labels - Universal Music, Sony BMG, Warner Music and EMI - to provide tracks in Apple's DRM-free AAC format.
iTunes will initially offer 8 million of its 10 million track catalogue in the new format, with the remaining 2 million tracks to be converted in March. Customers will be able to upgrade their existing tracks for to the new format for 30 cents per song.
"We are thrilled to be able to offer our iTunes customers DRM-free iTunes Plus songs in high quality audio," Apple CEO Steve Jobs said.
Under the new pricing structure, songs will be available in three price points - 69 cents, 99 cents and $1.29 - based on what the music label charges Apple. Most albums will remain priced at $9.99.
Apple will also make iTunes available via iPhones using 3G networks, complementing the existing use of Wi-Fi.
Apple made these announcements at its final appearance at the annual Macworld trade show. For the first time, Steve Jobs declined to give the keynote address for health reasons, leaving senior vice president of worldwide product marketing Philip W. Schiller to take the reins.