PayPal wants a slice of the online music pie

The eBay-owned online payments platform on Monday announced it would offer reduced fees for merchants as part of a new micropayments pricing strategy created exclusively for the red-hot digital music sector. Looking to lure online music services into offering the PayPal platform as a payment option for music subscriptions and downloads, PayPal announced the new payment processing rate of 2.5 percent plus 9 cents per transaction -- well below the average of 2.2 percent to 2.9 percent plus 30 cents per transaction now available for existing PayPal merchants. PayPal director of merchant services Todd Pearson told internetnews.com the 30 cents per transaction structure did not work for digital music services hawking 99-cent downloads. "Part of what we're doing here is telling the music services that our previous fee structure didn't accommodate them at all. Taking 30 cents from a 99-cent sale doesn't work and we're changing our fee structure to make it work," Pearson said in an interview. "We've changed our fee structure only for this market," Pearson added, noting that the existing rate of between 2.2 percent and 2.9 percent plus 30 cents per transaction will remain in place for non-music merchants. He said PayPal would begin negotiations with all the major players in the a la carte download space -- including Apple's (Quote, Chart), Roxio's (Quote, Chart) Napster but he made it clear the new fee structure was not available for fee-based subscriptions in the range of $10 per month.