“Digital music sales in the U.S., the world’s biggest market, have hardly budged in the past five months. They almost tripled to 6.6 million downloads a week in the year through May, and were at 6.7 million in the week ended Oct. 23, according to Nielsen SoundScan, a unit of Dutch media company VNU NV,” Charles Goldsmith reports for Bloomberg.
“The iPod, with more than 28.2 million sold, isn’t providing the panacea that the music industry seeks. EMI Group Plc Chairman Eric Nicoli forecast in May that digital sales would help revive the $34 billion recorded music market. For now, they’re unlikely to offset falling CD sales that are causing global revenue to shrink for a sixth straight year,” Goldsmith reports. “‘Digital optimism seems to be crashing in on itself,’ says Simon Baker, a media analyst at SG Securities in London, who has a ‘sell” rating on shares of EMI, the world’s third- largest music company. ‘Downloads in the U.S. have alarmingly plateaued. This has devastating implications for predictions that digital sales would grow exponentially.'”
“The download numbers suggest that the iPod’s iconic success, which has driven up Cupertino, California-based Apple’s share price almost sixfold since 2001, isn’t translating into new music sales the way the evolution from vinyl albums to cassettes and then CDs did. For many users, the portable devices are just another way of stocking and listening to music, not an incentive to buy new music,” Goldsmith reports. “In the U.S., annual downloads per iPod dropped from 25 to 15 in the last year, New York-based Fulcrum Global Partners LLC said in an Oct. 17 report. Global CD sales fell 6.7 percent to $12.4 billion in the first half of 2005, according to the London-based International Federation of the Phonographic Industry, or IFPI.”
“‘It’s a blip, not a trend,’ Paul Burger, 50, president of London music-management agency Soho Artists and the former head of Sony Music in Europe, says of the leveling off of U.S. downloads,” Goldsmith reports. “That belief has music companies, led by Warner Music, fighting to boost the 99-cent retail price on their most popular songs downloaded on Apple’s iTunes Music Store. The music labels seek pricing that varies with demand for a song. They get about 65 cents per song from iTunes, Merrill Lynch & Co. analysts said in a June report. Given current profit margins, selling 10 digital songs will reduce record company profit by 20 percent compared with selling a CD at an estimated $10 wholesale price, according to the report.”
“‘The market ought to be able to decide, not a single retailer,’ Warner Music’s Bronfman, 50, said in September at a Goldman Sachs Group Inc. conference in New York. Days earlier, Apple CEO Steve Jobs, 50, said at a Paris news conference that music companies were being ‘greedy” by seeking more for downloaded tracks, adding that it would only encourage piracy. ‘There will be variable pricing, multitier pricing,’ Universal Music CEO Doug Morris, 66, said Oct. 6 at a meeting of financial analysts in London. ‘The issue is going to be when and who blinks first.'”
Goldsmith reports, “More than 600 million songs have been sold through iTunes since Apple started the online music site in April 2003, Jobs said in September. The company has more than 10 million account holders, and sells 1.8 million songs a day globally. Apple last month began selling more than 2,000 videos, which can be watched on a new iPod device unveiled on Oct. 12.”
Full article here.
Advertisement: The New iPod with Video. The ultimate music + video experience on the go. From $299. Free shipping.
It’s way too early, yet. Despite Apple’s stellar success, there are not yet enough people with iPods and those who are getting them are still in the process of ripping their CD collections. Some people are not satisfied with the bit-rates offered by services, including Apple’s iTunes Music Store, so they’re sticking to ripping CDs to iTunes and transferring to iPods. It will take awhile for the transition to occur. But, certainly, raising song prices won’t help. What will help is waiting for enough iPods to get out to the world. Certainly, increasing the bit-rate quality would help a “bit,” too. Another idea would be to release major artists’ works online first and delaying the CD release for a short while. But, mainly, patience is needed, not raising prices. As more people get iPods and experience Apple’s iTunes Music Store’s easy-to-use instant gratification, sales will ramp up. Eventually the day will come when a major artist releases their work only via download, not CD. We’ve got quite awhile to go until that happens.
And if the music industry is waiting for Steve Jobs to blink first, they’re even crazier than anyone ever thought them to be, if that’s possible. Jobs could simply continue to sell millions of iPods that people load with music ripped from CDs, as they do today. That’s where Apple makes the money, from iPods, not from iTunes Music Store sales. The music industry needs to remember that fact.
Related articles:
Independent label addresses the Apple iTunes 99c question – October 05, 2005
Warner’s Middlebronfman: ‘We sell our songs through iPods, but we don’t have share of iPod revenue’ – October 05, 2005
Apple’s iTunes Music Store dominates as digital music sales more than triple – October 03, 2005
Dvorak: record companies’ biggest concern about Apple’s iTunes is clear and accountable bookkeeping – September 29, 2005
In 99-cent fight with ‘Looney iTunes’ labels, Apple CEO Jobs will get whatever Jobs wants – September 29, 2005
Warner music exec discusses decapitation strategy for Apple iTunes Music Store – September 28, 2005
Warner CEO Bronfman: Apple iTunes Music Store’s 99-cent-per-song model unfair – September 23, 2005
Analyst: Apple has upper hand in iTunes Music Store licensing negotiations with music labels – September 23, 2005
Steve Jobs plays high-stakes poker with greedy record labels – September 22, 2005
Record labels accuse Apple CEO Jobs of ‘double standard’ as they seek to force iTunes price increase – September 21, 2005
Apple CEO Steve Jobs to repel ‘greedy’ record companies’ demands for higher iTunes prices – September 21, 2005
Apple CEO Steve Jobs vows to stand firm in face of ‘greedy’ record companies – September 20, 2005
NYT’s Pogue to record companies: it’d be idiotic to mess with Apple iTunes Music Store prices – August 31, 2005
Apple CEO Steve Jobs prepares for pivotal fight on digital music prices – August 28, 2005
BusinessWeek: Apple unlikely to launch music subscription service – August 15, 2005
Record labels to push Apple for higher iTunes Music Store prices in 2006? – August 05, 2005
Study shows Apple iTunes Music Store pay-per-download model preferred over subscription service – April 11, 2005
Record labels look to raise iTunes wholesale prices, music industry fears Apple’s market domination – March 05, 2005
Report: Apple CEO Steve Jobs ‘angered’ as music labels try to raise prices for downloads – February 28, 2005
Report: Music labels delay Euro iTunes Music Store fearing Apple domination – May 05, 2004
Greedy Big Five music labels looking to jack up iTunes songs to $2.49 each? – April 22, 2004
Increase the bit-rate to cd-quality and add complete digital-booklets with lyrics and artwork and I will most likely buy ALL of my music from iTunes. Until, then I buy little from iTunes and just rip cds.
Album Art, liner notes, stuff to read. CD’s have this and most iTunes albums do not.
I have yet to purchase a digital album for this reason, and until it has more than just the Tunes I’ll buy my albums at the brick and mortar store.
How difficult is it to include the basics?
MDN MW = was not Was.
First the recording industry says it’s afraid of an Apple monopoly on digital music, then they want more $$ per song, then they say iTMS is not successful enough.
I think I see a split personality problem here.
I would like to know, however, how the number of “legal” digital downloads were calculated. Did they look just at iTMS or did they include the subscription services? Because if the subscription services is part of the equation, that’s what’s making the resulting numbers allegedly “disappointing”.
Wonder if these numbers reflect the Record Industry making CD’s incompatibe with iTunes?!
Bit-rate, schmit rate. That’s a non-issue. Only the most demanding music lover is put off by the quality of downloaded music, and they aren’t iPod customers.
Frankly, I’m beginning to see some wisdom in a stratified pricing structure. But only if CDs carry DRM protection, preferably Apple’s.
If you want the ‘body’ of an artist’s work, that usually comes with a CD, then buy the CD ($15?). If all you want is the top tune then buy it, but the price is $2.50.
Putting the same value on the lead song of a CD, as the other 13, or so, filler songs is not reasonable. CDs are purchased by the overwhelming majority of people for one, two, maybe three (rare), songs. The remainder are provided to help justify the $15 price tag.
Question: What did you buy in 1959 (that you can buy today) for $1.00, and the price is still $1.00? 99¢ for legacy music (that has already been extensively mined) is a reasonable price. 99¢ for a current hit may not be, and probably isn’t.
The problem in this debate is the inept way the music industry has presented its case. I think they’re afraid to admit that 90% of the music on a CD is worthless.
Perhaps people are spending their disposable income on increased energy costs. You need a certain comfort level to spend money on nonessentials even at $.99 a pop.
You people are looking at things from a completely wrong angle. If artists make good music, or at least are allowed to be creative and make good music, people will pay for it. How many new ‘good’ artists are there? Probably lots of them! But how many of them get proper marketing and attention? Very few of them. Why don’t the big guys try to support people with talent and not just quick 50 cent / britney spears gimmics to flood the airwaves.
iPods and digital downloads have nothing to do with declining music sales. I love music, I personally own more than 600 physical CD’s and on my iTunes have more than 5,000 songs, but I won’t pay for garbage. However, when something good comes out, yes, I pay for it, I will go to the record store to find it and if its really hard to find, I Google it and buy from a novelty store or some outlet. I am sick of people saying P2P is killing the music industry. The music industry forgot about music and became a money making industry. That’s the problem!
Increasing prices without adding value is foolhardy for any business and will drive people away, not to it. Silly music industry ought to know that by now.
“Vinyl to Digital
The download numbers suggest that the iPod’s iconic success, which has driven up Cupertino, California-based Apple’s share price almost sixfold since 2001, isn’t translating into new music sales the way the evolution from vinyl albums to cassettes and then CDs did. For many users, the portable devices are just another way of stocking and listening to music, not an incentive to buy new music.”
Well Duh! No shit! People buy iPods and then fill them with music from their existing CD collection as well as a few tracks a month from the online music store.
Interesting. There are some very smart people out there. NOT!
If they continue to provide great tracks from good groups on CD and (eventually an NZ iTMS-not counting the back dooor to the Aussie iTMS) then I will continue as a when free cash allows, to buy good CDs and or music online. I dont buy crap CDs just for the sake of buying music.
I can see why sales might level off when you look at it a certain way (song sales per ipod). I hope they are considering that some people replace or own multiple ipods.
$9.99 is the cut-off point for me. anything above that, and I’d probably look for a used CD instead.
seems like CD’s, which are close to $20 each are also losing money, so apparently raising the price does NOT increase sales. Can’t be that hard to understand, seriously. its just greed.
“Question: What did you buy in 1959 (that you can buy today) for $1.00, and the price is still $1.00? 99¢ for legacy music (that has already been extensively mined) is a reasonable price. 99¢ for a current hit may not be, and probably isn’t.”
99¢ is ridiculously overpriced on legacy catalog items — which have already more than paid for the costs of their original production through previous sales.
The labels could provide thousands of songs from their back catalogs for the trivial cost of encoding them for AAC delivery via iTunes, resulting in what amounts to almost pure profit, and which would make them big bucks at even at half the current 99¢ standard price.
The artists, of course, will continue to be screwed to the tune of pennies on the dollar — perhaps less, depending on their particular deal.
Apple should negotiate a buyout of Apple Records as part of the settlement in their Beatles lawsuit, then go into the music business for real, offering artists direct deals with iTunes. The big-label music mafia would go out of business faster than Paris Hilton running an H&R Block office.
Just my 2¢ — which is more than a lot of artists ever see from their deals with Big Music.
GREED!
That belief has music companies, led by Warner Music, fighting to boost the 99-cent retail price on their most popular songs downloaded on Apple’s iTunes Music Store.
The music labels seek pricing that varies with demand for a song. They get about 65 cents per song from iTunes, Merrill Lynch & Co. analysts said in a June report. Given current profit margins, selling 10 digital songs will reduce record company profit by 20 percent compared with selling a CD at an estimated $10 wholesale price, according to the report.
Dear Mr Thurman
I totally disagree with your point about the bit rate being a non-issue and that “Only the most demanding music lover is put off by the quality of downloaded music, and they aren’t iPod customers.”
I own a budget priced hi-fi system and buy a heap of cds. My wife and me own nearly 1200 vinyl recording that I am currently digitising. That means myself and my wife just love music.
Similarly I have a 3rd gen. 20 gig ipod and my wife has a six gig ipod mini. I’ve tested the quality of some of the songs listed on ITMS both in the U.S. and Australia (via purchases) and the quality is below par. Near cd quality is not good enough for me and I refuse to waste my money on music that needs to be clearer in sound quality.
There are numerous other issues involved. I think that bit rate is one, DRM is another, closed DRM marketing is another. That is, if you buy a cd it plays on a cd drive. If you buy download music from non ITMS sources you cannot play it on an ipod. Likewise if you purchase music form ITMS you can only play it on an ipod.
Last but not least I still do not think that ipods or other mp3 players have reached the mainstream market. Perhaps Apple and other manufacturers might consider reducing their pricing for mp3 players generally. For example a portable cd player costs much less than mp3 players. These points are controversial but when you consider that vinyl records, cassettes and cds can be listened to universally it is a compelling argument.
There are other issues involved and I think music pricing is one. I have long advocated that download bit rates should be price based. With higher prices linked to the bit rate. Likewise none of the major manufacturers have settled on a stable business model on what is still an emerging market.
Finally there is the issue of copyright and perhaps we are finally seeing the death of a legal principle that has only been around for 150 years. Perhaps many people have become so accustomed to illegally downloading music that DRM and copyright seem at the very least alien and at worst a load of BS.
As I have said, there many issues involved here and I have to admit I don’t have the time to air them. It is however worth perusing some of the views put forward on this website as to how the legal download market can be improved.
P.S. Greg, my wife and me have already discussed purchasing an ipod with video capability. My advice is to think before you make broad and sweeping statements.
What cost a dollar in the ’50’s is now still costing a dollar? Actually, it’s free, and songs are easlily located and pirated in 40 seconds.
That’s what iTunes is up against, and is pulling the music industry into the lead, with legal downloads outpacing illegal ones.
The consumers are fed up for paying $15 for a CD to essentially purchase one song. While a popular song can be purchased and enjoyed by millions and millions of more people using the iTunes system. This helps the bottom line far greater than CD sales.
Again the greedy music industry is jumping to conclusions and the first thing they want to jump on is the price. Then they want to copy protect everything to death. Then they expect people to buy it? First they should get rid of any copy protection on there CD’s, Sony! Then they should lower the price of online music. They they would see an immediate rise in those numbers of online sales. But there to greedy for that.
I currently feel that iTMS songs are worth about 50 cents. If you consider the low bit rate, lack of cover art etc then it seems unreasonable to me to charge the same price that you can get at discount stores for CDs.
Where iTMS will really win out is by providing access to out of print music. Once the labels realize they are sitting on a goldmine, digital DLs will really take off.
I seriously will not buy many songs on iTMS unless the songs are DL at near to lossless rate. Why should I spend 10 bucks on a album at 128 kbps when I can rip it from a CD at whatever rate I want.
I will buy more iPods but I won’t buy many songs on iTMS until the deal is worth it. Either reduce the price or increase the bit rate.
It’s not really fair to say that albums have 2-3 good songs and then the rest are filler crap. I bet the artist who wrote that song think differently about their album.
But even so, there are a lot of subpar songs on many albums for too long because the companies are greedy. I’ve seen this a lot in Hong Kong records where they pump out Albums every 6 months or even less with maybe only 1 good song…or not even 1 on the entire 10 song CD.
So how do you price. The ones that become singles are more expensive??? Sometimes the singles aren’t the best songs on the CD. So how does that work? It really doesn’t.
I still buy CDs because I like having the album art and a CD to keep. I have yet to purchase and songs from iTunes. But when I do, I’m not going to pay more than $0.99/song or $9.99/album.
Simply put, there are tradeoffs and that’s okay.
1. p2p – a bit inconvenient, varying quality, individual songs
2. iTunes and most other download stores – convenient, decent quality, DRMed, individual songs (mostly)
3. cds – a bit inconvenient, better quality, liner notes and possibly other extras, possibly DRMed on Windows, albums
p2p is free. Price the rest appropriately and the music industry can earn good and growing profits from both distribution channels. Price it greedily and they’ll have nothing.
And iPods will continue to sell whichever way.
The slowing growth of digital downloads for music sounds right.
Even with the addition of the Japan store, iTMS music sales seems to have plateaued at around 1.6 to 1.8m songs a day since passing 500 million on July 18. If it was growing much since then, it likely would’ve passed 700 million by Oct 25 when Australia’s iTMS was announced. But Eddy Cue only said over 600 million, which Jobs also said back on Oct 12.
From Apple’s viewpoint, there are other things to use the iPod for such as podcasts, and now the addition of video.
I have a radical idea. Why dosn’t the music industry MAKE SOME NEW MUSIC? Or better yet why can’t the music industry fark off and leave to the artists to worry about.
Am I the only one that finds it odd that the author of the article felt compelled to quote each of his subjects’ ages?
The price of iTunes downloads has to remain consistent but it should be halved if the music industry wants people to buy more music online. Right now buying from iTunes is better than buying music in any other online music store but I still see the CD as better value.
You all should check out http://emusic.com/ too!!! I’ve been using it in addition to iTunes MS and I love it. I’ve got far more tracks from them in the past few weeks than I have from iTunes in the past few years. Best of all its leagal and there’s no DRM in the mp3 files! I found out about it through MacAddict magazine.
I’m always amazed at the odd comparison of CD sales vs individual song sales – they can’t be compared. Very few people I know would buy an album with just one ore two good songs on it. Yet if they opt to purchase them individually, twelve or more legal purchases would equal one CD of traditionally recorded music.
Bit rate IS an issue.
I own an iPod and quite frankly the 128 AAC does not measure up. To my ears it sounds “tinny”. It just seems to lack something.
I admit that AAC is much better than mp3 at equal bit-rate, however they both are not enough.
Whilst it impacts on the capacity of my iPod I prefer to rip my CD’s with at least a 192 Variable Bit-Rate with a Lame decoder (sounds better to my ears) mp3 format so that I do not lock myself into iPod should market forces change.
I cannot bring myself to purchase tracks from iTunes Music store at 128 AAC, unless it is a track on back catalogue and I have no choice.
I would happily pay a 20% premium per track for a higher bit rate format (say 320 AAC), for the audio experience AND so that I also have the option of transcoding it into an mp3 (yes I know I lose audio quality – but 320 should be high enough) should I decide in the future to not use an iPod and want to play my music elsewhere.
On a PER TRACK basis, I’d pay even more for a lossless format, as it has been noted I’d be able to choose ONLY the songs I want, rather than buy an entire album, of which I only want a few tracks.
Apple could also consider offering a LOW QUALITY preview of the ENTIRE track. I actually think this would IMPROVE sales of individual tracks, as I think most people would be unlikely to purchase an unknown track based on 30 secs. 30 secs is NOT ENOUGH to assess an song. Some songs are only just getting started in that time!!!
It’s like providing the bottom right hand corner of the Mona Lisa and asking someone to judge it’s value as a piece of art.
My 2 cents
Luke
PS – check out the Mona Lisa – not much is visible but a heap of BLACK in the bottom right hand corner!
they could put ALL the liner notes into ID3 tags…and do it so that you could make widgets and visualizers that make the experience better.
Charge $3 and you would still be making a killing.
remember, it costs $0.30 to make a CD. Everything else is coke and whores.
Figure that the cost of an mp4 to be sent over the web is less than $0.01, that’s EVEN MORE money for hookers and blow.
Fsck you music industry. Download until I die.
Nobody seems to have mentioned podcasts and videos.
I’ve bought less iTMS songs in the last month while I trial videos and catch up on listening to my podcast subscriptions. But as I start to unsubscribe from the rubbish, I’ll start buying more music. This is why I think lower music sales might only be a blip.
Too much hassle perhaps?
Perhaps the whole experience of downloading, adding, shuffling music around on a portable device starts to be a hassle after awhile and people don´t have the time or inclination to do it again.
I found after the first flurry of massive loading up of music on the ipod I rarely do it anymore. I think all that hassle (I know its not much) just to add a song to the other thousands I already have on the iPod??? So I don´t do it.
Plus I kind of like going to the store, shopping and browing through all the CDs.
Plus lots of music out there nowadays just sucks.
As has been said here, bitrate is an issue as to why people aren’t buying off the iTMS. However that does not explain the effective lack of growth over the last few months.
The real explanation for the lack of growth is that the music industry is seasonal, and the rate of growth of the iTMS is just slowing down a bit. Sales are always slower during the summer months – that’s just the way it is.
At my company when we were a plain record label we saw the same thing. Now that we’re a download store (http://www.karmadownload.com), selling the music of a few thousand labels, we’re still seeing a similar trend – our growth has been slower over the last few months.
FYI we sell high quality unlocked MP3s (mostly 256kbit, some at 320kbit) at the same price that the iTMS sells its lower quality DRM locked stuff. Since our growth too has slowed over the summer it seems probable that the quality is not a big issue.
IMHO there’s no story here – it’s just how the music industry has always works. The analysts as usual aren’t doing a great job, looking at short term news and failing to see the bigger picture. Sales are already picking up now for the run-up to Christmas – I’d expect the iTMS sales are ramping up too.
Perfectly obvious…Apple makes products that we’re all buying, viz the Nano, G5iPod, iMac et al. We have nothing left to spend on the music for heavens sakes!
I’ve bought 5 cd’s in the last 4 years, and 3 of them were used. In the decade before that, I bought about 100 (mostly new). However, my music collection is about 5 or 6 times larger than it was 4 years ago. I’ve never used p2p for music, but I’ve borrowed cd’s from friends, relatives and libraries. Money I used to spend on music went to a bigger HD and an iPod. The only way that the music industry will survive is to lower the prices drastically, to about 10 cents a song. Otherwise, it’s just too easy to get music for free.
It will be along time before I stop buying albums in their physical form. I use iTunes to buy songs, either new songs or those classic tracks I don’t own in another form.
The beauty of the iTunes model is that you don’t have to buy a whole album. The record companies should be changing, if they want increased sales of albums then push the single tracks on iTunes and use them as a way to hook people into buying full albums. Or, they could even subsidise iTunes and use it as a listening booth so people could try stuff at home before they buy. Any sales being a bonus.
I heard Mylo on Later with Jools Holland the other day and used iTunes to sample some tracks and bought a couple. I like them and am considering the album – I never would have done this before iTunes. If i bought every album I was intrigued by then I would be bankrupt. Similarly I never bought singles because they were expensive for the 1 song I wanted and just cluttered up the place seeing as they were the same size as a full album.
The record companies just see online as another way of getting money and that’s it, they don’t see that you have to figure out how to best do that in combination with your existing markets.
Common sense would dictate that when the market is flat you reduce prices.
Ah well … if the single price breaks then some legacy songs could go down to 15 cents, at which rate they probably would be uneconomical to sell. That’s why a particular artist broke ranks with SONY. His old works only sell as part of those heavily discounted and advertised compilations. Anything he sold through the iTMS (and it couldn’t be much anyway) generated more revenue per track.
On the flip side, could their perpetually underdressed diva sell as many tracks at $2.50 rather than 99-cents a pop or would the price lead to no change in behavior by the p2p crowd?
I prefer Steve’s one-price solution. Older people can afford to pay 99-cents for a favorite legacy track. The less affluent younger set might turn to piracy for their $2.50 favorites.
Methinks the music industry will continue to lash out because of their own failures and the unhreasonable expectation that they deserve a never ending and never shrinking stream of revenue.
Brought to you by the MW: “never.”
Comparing iTunes downloads to the Vinyl –> Cassette or Cassette –> CD transition and expecting the same kind of exponential growth is unreasonable.
Cassettes came in at a time when new music was still original and free from engineered “grils/boys groups”. They offered portability and an alternative to cumbersome Vinyl. CDs offered higher quality and durability but no easy means of transfer so the incentive was there to re-buy your music collection.
Digial music has a built in migration path to transfer your existing music collection (CDs) to the new media (so no rebuying of whole music collections). Add to that the fact that the industry is flooded with much lower quality performers and the “engineered” groups and you have a setting that just won’t generate growth.
Perhaps people are spending their disposable income on increased energy costs. You need a certain comfort level to spend money on nonessentials even at $.99 a pop
—
let’s not forget that what apple is selling is cheaper than anything in a record store.
This is not a content quality issue (bit rates, compression format). Average American consumers don’t care about “technical” quality (data compression); they do care greatly about “convenience” quality (ease of use).
I personally would not have a problem with tiered pricing. Go ahead and charge $5 for the new “boy band” or “Britney” or “Christina” single. I’m not buying new music at 99 cents anyway so the price of these tunes does not matter. I would be sad if general catalog prices rise above 99-cents per song. I think that’s a reasonable price point and I have no trouble pushing the buy button when I find songs that are what I like. I’d like it if the iTunes software would remain stable for a while – I get sick of updating software.
Record companys better wake up and smell the coffee. It’s never going back to the old days. Digital was a double edged sword for them. It brought them great sales and income but it also, ultimately, led to their product being given away.
Price is a huge factor with kids. Why pay when you can get the songs free? Personally I’ve never downloaded from swap sites (not even one song), but my kids, the neighbors kids and 95% of the University of Missouri pay nothing for their music – it comes free with their internet connection (thru file swapping). On a recent visit to the dorm building where my daughter attends college the only computers that did not have LIMEWIRE on them were the ones managed by the University.
The sound quality is questionable on “file swapped” music with strange chopped endings and intermittent periods of sounding “underwater”. These are the biggest telltale signs of music obtained from swaps. The kids don’t mind gross endings or technical problems because the price is right….free. Raising the price will not yield what the big record companies are wanting (mo money, mo money).
Copy protection on CDs does not stop file swapping. It only takes one person to make a copy using analog equipment and the songs are all over swap sites. Copy protection on CDs just shafts legitimate users who “bought” the CD.
Instead of raising prices they should lower prices to rediculous levels per download on general catalog music tracks. If record companies were smart they could offer discount coupons as part of their marketing that would drive download costs down to 20 or 25 cents per song. People don’t inherently like breaking the law (swapping files) and at some price point users will choose to buy instead of steal.
Consumers recognize value in products. Back in 1985 when CDs were still new technology $15 to $18 for a CD might have been accceptable. Today people view CDs as “cheap” to manufacture (and they are) so looking at a $15 CD and knowing you’re over-paying (because you want a quality copy right now) is a questionable value proposition. It’s even harder knowing that when you stop at the gas station on the way home from Walmart you’re going to pay 2.5 times more than a year ago for something you can’t get from Limewire, GASOLINE.
bikersrule
You’re correct. Bit rate is an issue.
>P.S. Greg, my wife and me have already discussed purchasing an ipod with video capability.>
Should that be -my wife and I?
I agree, bitrate is a real issue. We’re increasingly streaming music to a stereo, and AAC quality is simply not enough. But at the same time our connection speeds increase, and quite a lot of people have gotten 8-20 MBps ADSL2+ solutions in the past few months.
I would be willing to pay a little more to buy songs or albums in Apple Lossless. iTMS should be able to offer a double option — selling AAC tunes (bumped to 192 Kbps) for the current prices, and also sellings the same songs in lossless for a little premium.
I can see and quite a few people over here feel pretty much the same. But the real question is if Apple and the labels are willing to explore this market.
Maybe sales stopped growing because Podcasts are now part of iPod users’ daily playlists. I spend at least two hours every day listening to podcasts and I am not alone.
There is also nothing very exciting happening in the music industry right now. Sure there are some good artists here and there but there are no new styles or movements getting us excited about music again.
I think the bit-rate issue is irrelevant to most people who buy music online. Once the iTunes Music Store started selling music it proved that a market exists for lossy AAC files. Not only does it sound good but it is also quick to download.
I’m sure they’ll sell even more at $3 a pop on cell phones and raising the prices for iTMS and others, too…
Downloaded music sucks if its not in a lossless format free of DRM.
The iPod and it’s easy of use and listening to ones music I think slows the sales possibly. The simplicity of locating all your music. In the previous state, cd’s. Get up, go stand in front of your collection, decide what your in the mood for, pull it dwon, open case, No that’s not what I want to listen too, take it out, stand and look some more, select, open jewel case, put in cd player, hit play again, go back to what you where doing, no that’s not the mood I’m in, go through it again. So you think to yourself, tomorrow I’m driving to Wal-Mart, Tower Records or whatever to get some new music. CD’s sales are being driven.
Now with computers and iPod/iTunes, you buy music easily, listen easily. You’ve ripped your whole CD collection. So when you listen and ithe music is not setting the mood you want, simple to change and go through it all. You don’t need to go and buy a cd because you’re just not in the mood to keep selecting cd’s, open the case, load into cde player and etc…
So digital (iTunes)sales may have slowed for this reason. People listen more and longer to the music on their iPods than on the old stereo model. I know I do.
Appreciate the music I have instead of constantly buying.
Low sales? Hmmm. Perhaps people aren’t willing to buy crap. Oops. Did I say that?
What a bunch of retards.
Yeah, raise the price, thats will surely convince people to buy more. Unbelievable.
What about CD compilation: “Big hits!!! of …” ???
With iTunes, no need for CD compilation…
It’s all about the free podcasts – So many of us are subscribing to free podcasts, and listening to them takes time away from listening to songs. And did I mention they are free? And some podcasts you can even watch, too! Right on your computer. And on your 5G iPod if you have one.
bit-rate does matter – most headphones don’t expose the songs, but through high quality speakers, the flaws of the lossy compression formats become apparent.
DRM: I’d like to use songs with software like Traktor, which won’t play DRM AAC files.
I buy 15-20 CDs a month and probably, but only 1 or 2 on iTMS because of those two reasons.
Liner notes, art…I like them both, but ultimately don’t know if I’d pay more for it except when the artwork is exceptional. For that reason, I wouldn’t mind a pricing structure for different bit-rates and artwork, but such an approach doesn’t seem very Jobsian, who rightly believes that the bulk of consumers want things to be as simple as possible.
Wonder how subscription based services are accounted for in terms of sales? I don’t know if subscrip services have enough users to have any effects here, but at some point they’ll need to have some way to convert those to track or album sales…ah, the album.
These record companies just kill me man…
As a music-lover, a musician, and a purchaser of 8-track, vinyls, cassettes, CDs, and online music for over 25 years, all I have to say to these money-grubbing record companies is: put out quality music, and people will buy them.
MDN Magic Word: many, as in too many money-hungry record companies in the world.
This is what the movie industry is watching(music sales on iTunes) and why the video in Ipod will not live up to the hype the media is writing about. Hollywood is scared to put it content on itunes for the new iPod because sales of DVD discs are more profitable. The revolution will not come for tv shows and movies but at least we’ll have our music.
You heard it hear first. Just enjoy putting videos of your kids on the ipod, more cool to show people a clip than a rabbit eared photo from your tattered wallet.
Everyone already downloaded their favorite music rom iTunes from years past. There is no good current music, thus sales are leveling off.
I know when I bought my iPod I spent alot of time on iTunes gathering up all my favorite music. Now I just check it once or twice a month,
Don’t forget during that same time frame there were 3 major hurricanes in the U.S. that put many many cities out-of-buisness. People without homes were not thinking about where they could connect to the internet so they could download their next iTunes song.
An even greater influence on total sales was when Apple showed their true colors and encouraged people to divert their iTunes money from buying music and donate to the Red Cross.
While other businesses saw the hurricanes as a marketing opportunity to get hits on their web site by simply burying a “link” to the Red Cross on their site and then encouraging everyone to do-the-right-thing by going to their web site (such as that network that hosted the Emmy’s) Apple was actually COLLECTING the money and then turning over 100% of it to the Red Cross.
Two tiers of Pricing: the current .99 cents per song for a lossy format, a 1.50(?) for a non Lossy format.
Continue with the screwed up distribution methods and slowly die or inovate and live. I don’t have hopes for that from the RCMA.
Apple needs to have a streaming music channel of it’s own that record industries can offer a track (ala Radio) of a non established artist they wish to promote. Keep these tracks available for a month or so. Add a download option for all artists being played w/ links to their full albums. Very little overhead, no promotion to speak of, no discs made. If the group takes off then it’s the public not some industry jerk who makes the call.
having read so far a couple of summary points:
1) Digital Revolution: Too much of this country, myself unfortunately included, is still on dial-up. Try downloading a song over a dial-up connection; far too painful to mention.
2) Bit Rate: Having higher quality songs means larger files. This is a problem for using iTunes unless you have a large back-up hard disk. Just transfering CDs etc. will use up much of the hard drive space. In addition, too many people have dial-up!!
3) The lack of download quality is precisely the reason why people will still buy CDs (like many commenting here) This was most likely a compromise between the record companies and iTunes etc.
4) I’m missing some logic here…digital songs aren’t selling. But CDs aren’t selling either. Perhaps there is something wrong with the music?
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Why do execs in the US think that selling a popular song at a high price on introduction is the best sales method. In many countries where singles are available the new releases (chart) are cheaper than the older singles. Part of this is obviously supply and demand, as one must predict what older releases to stock instead of using popularity and a lower retail price for predictors. If you get 100 units of the latest thing in you then you either offload them based on popularity or because people might be curious since it is a decent price. Old music (decade +) usually retails for substantially less than current music in almost all countries (especially that from the 80’s). It is actually cheaper to buy many decade old popular CD’s at tower than it is to purchase the entire album on ITMS.
In ‘selling music’ the US labels would do well to encourage the sort of materialistic collection fever that drove cd sales to begin with. People often brag about how many songs they pirated, but there’s no ‘popularity’ reward for your library of purchased DRM music. Selling new singles at a lower rate than average works in a multitude of ways to deter piracy and increase sales, not the least being that anyone can immediately get the popular song they want on release for a low fee. This also spawns repeat visitors and music exploration.
Older collection music sold at below average is also reasonable as a) many people own the music in a different form and thus a theoretical license, and b) the overall profits from anything out of print or not available in a store is 0 (zero), so making any profit from w/ almost no cost of sales makes financial sense.
What should cost average? Albums which are relatively new, yet not new releases, where a normal and competitive quantity must be sold in order to recoup production costs.
Average, yeah…I guess that should be changed to variance from 9.99.
ITMS also could do with a serious ‘check out what I got, since I own it you can get it for 10 cents off since it deters piracy’
In short, with tiered pricing that charges more for popular songs the US recording industry is upside down on a lease and expecting a new vehicle out of a trade.
Online sales represent a separate market, but if people want to think it’s the same one then try to be reasonable about it.
You want the same liner notes and art that came with all your albums? You might notice there are tons of albums w/o liner notes. Add the lyrics and art yourself, there are lots of apps that do this for you.
Oh and to the comment on low quality previews of a song.. that’s golden.
Dear ron,
I don’t know when I started changing the usage from “I” to “me” and I honestly thought I was right on this one. Alas, you’re right and I’m wrong. I checked with a chief sub-editor (my wife) and she corrected my usage.
br
The market should decide the price, not the retailer. Hmm, his defintion of market is different than mine. The record label does not equal the market. Sorry assholes, people have been sick of you guys for a long time. Enjoy the downward spiral.
$10 for 2 or 3 good songs is not a deal.
Of course the # of downloads per iPod will start declining. When I had 1 iPod, I downloaded 30 songs within 3 weeks. Now that I have another iPod, I’m not going to download 60 songs in 3 weeks. How crazy. The number of downloads should be calculated against the previous month and year and not as a percentage of iPods sold. Every time someone updates their iPod with a newer one, that doesn’t mean that they should exponentially increase their son purchases. I don’t buy new music. I just downloaded some “Old School”.
re: migration LPs->tapes->CDs->Digital.
1) Back in the day, I sure taped a lot of my LPs rather than buying a tape. So maybe the surge in sales had more to do with having good music rather than the medium (BTW just watched Herbie Fully Loaded. What’s up with all the 80’s music?)
2) Copy protected CDs are to insure that sales will be repeated in digital format rather than just copying the CD. another bad idea!