WSJ mistake: ‘digital-music sales have stalled for the first time since Apple launched iTunes Store’

“The music industry has long resisted selling music in the MP3 format, which lacks the copy protections that prevent songs from being duplicated endlessly. But now, Blue Note Records and its marquee artist, jazz-pop singer Norah Jones, are selling her latest single through Yahoo Inc. as an MP3 — despite the risk that it may add to piracy problems… Another EMI act, Christian rock band Relient K, also released two MP3s through Yahoo yesterday,” Ethan Smith and Nick Wingfield report for The Wall Street Journal.

“The releases come as some high-tech and music-industry executives are becoming increasingly concerned about Apple’s growing clout in the music business. Only online music files purchased from iTunes, ripped from users’ own CDs or downloaded from pirate services can be played on the popular iPod. Copy-protected songs purchased from Yahoo and other legitimate sources don’t work on it. By selling music in the MP3 format without copy-protection software, Yahoo can offer music that works easily on iPods,” Smith and Wingfield report.

MacDailyNews Note: “Only online music files purchased from iTunes, ripped from users’ own CDs or downloaded from pirate services can be played on the popular iPod.” In other words, “only” all of the recorded music in the world can be played on iPods.

Smith and Wingfield continue, “The MP3 releases are coming as digital-music sales have stalled for the first time since Apple launched its iTunes Store in 2003. Digital track sales held steady at 137 million songs in the second and third quarters of this year, according to Nielsen SoundScan. That’s a slight drop from the 144 million sold in the first quarter.”

The Wall Street Journal provides the graphic seen on the left.

MacDailyNews Note: Digital-music sales have stalled for the first time since Apple launched its iTunes Store in 2003? Wait a second here. Are Smith and Wingfield incapable of basic pattern recognition? According to their own chart, third quarter 2005 showed a dip from the previous quarter – that would be the first so-called “stall.” Third quarter 2006 shows a flat result versus the previous quarter. In both years, the fourth quarter set records. We predict the same for this year. Furthermore, since each individual quarter shows healthy year-over-year increases there is no evidence whatsoever that “digital-music sales have stalled.” Next year, when third quarter again shows the same results, we hope reporters can forget the annual “digital-music sales have stalled” nonsense and look instead at the seasonal patterns that are clearly shown in their own accompanying graphics. Expect to see strong first quarters as Christmas iTunes gift certificates are redeemed mostly during that quarter. Gift certificate sales did not impact iTunes sales strongly until last year.

Smith and Wingfield continue, “For Yahoo, the deal with EMI represents another step in a long-running effort by David Goldberg, the vice president and general manager of Yahoo Music, to persuade recording companies to abandon their insistence on antipiracy software. Mr. Goldberg publicly floated the proposal at a music industry conference in February, but initially found few takers.

“His reasoning: Antipiracy software on music isn’t helping the industry because the same music is already available without copy protection on CDs and through Internet file-sharing programs. What’s more, many consumers don’t like the limitations that copy protection imposes on how and on which devices they can listen to their music. If DRM benefits anyone, Mr. Goldberg argued, it’s technology companies like Apple, because it makes it trickier for consumers that have made hefty purchases of digital music through iTunes to switch to non-Apple music devices in the future,” Smith and Wingfield report.

Smith and Wingfield report, “For music executives, allowing Apple to gain increasing control over digital music sales — iTunes accounts for more than 90% of the tracks sold online some weeks, according to people who work in the music industry — is shaping up as the latest in a long series of strategic blunders that have helped create powerful new gatekeepers between them and their customers. (Past middlemen have included radio broadcasters, MTV and big retailers like Best Buy Co. and Wal-Mart Stores Inc.”

Full article here.
The music industry did not “allow” Apple to gain increasing control over digital music sales. The music industry has deals with all the other online music stores, too. People buy 90% of the tracks sold online from Apple iTunes Store because Apple did it right. Apple took increasing control over digital music sales because, as usual, they made the best solution. Apple earned their market dominance through hard work and keeping the customer experience foremost in mind. We encourage the music labels to sell quality tracks without DRM, as DRM obviously does not work to prohibit music piracy, anyway.

33 Comments

  1. “Only online music files purchased from iTunes, ripped from users’ own CDs or downloaded from pirate services can be played on the popular iPod.”

    Well, that’s funny… I’ve been having no problems playing my purchased songs from eMusic on iTunes and my iPod.

  2. These authors are donkeys.

    “The music industry has long resisted selling music in the MP3 format, which lacks the copy protections that prevent songs from being duplicated endlessly.”

    Uh…uh…almost too much to bear. Adding DRM to MP3 is possible. They do not mean MP3, they mean “format with no DRM.”

    “But now, Blue Note Records and its marquee artist, jazz-pop singer Norah Jones, are selling her latest single through Yahoo Inc. as an MP3 — despite the risk that it may add to piracy problems…”

    This is just a stupid sentence.

    “Only online music files purchased from iTunes, ripped from users’ own CDs or downloaded from pirate services can be played on the popular iPod. “

    There are several legitimate online music stores that sell music without DRM, including in the unDRMable MP3 format. Bleep! Beatport, etc.

    “”For music executives, allowing Apple to gain increasing control over digital music sales — iTunes accounts for more than 90% of the tracks sold online some weeks, according to people who work in the music industry — is shaping up as the latest in a long series of strategic blunders that have helped create powerful new gatekeepers between them and their customers”

    Right, they “allowed” Apple to gain control of digital music sales. The fscking execs did not have the first fscking clue how to distribute music online in a manner that was useful to any consumer. They would have continued plundering along, bitching about piracy, and worked at putting DRM on CDs. Apple created the music download business as it exists today. What other company would have actually stood their ground to the labels on the pricing? None. Microshaft would have done their usual roll-over-and-expose-their-belly trick. Sony, even having iTMS as an example, put out a lump of crap.

    The major labels are fortunate that Apple created the music download business for them. Strategic blunder? If anything, keeping a sane, consumer-friendly middleman assures that the labels won’t be able to kill the goose long before it lays the golden egg.

  3. The analysis is complete bullsh*t. If these people used their head instead of spreadsheets, they might be able to figure it out.

    1- Many people bought music they used to have, favorite cuts from albums, tapes and CDs long gone, building up their library. Others bought music they already owned, instead of sitting all weekend, ripping CD after CD (not to mention the wear & tear on your optical drive). Once you have a nice collection built up, your buying is going to slow down.
    2- iPod sales have not been all made to unique users. Many people are on their second or third iPod and don’t need new music purchases to stock it.
    3- Some iPod users, primarily Jazz and Classical music fans, will not accept 128 AAC for their music. It’s O.K. for pop, oldies from the pre-digital era and guilty pleasures, but sucks for critical listening. Compare Pink Floyd’s Momentary Lapse of Reason or Dire Straits’ Brothers in Arms at 128 AAC to lossless or VBR and you will see it’s true of a lot of good Rock & Roll.
    4- Many have figured out that they can go to the used CD section, buy a complete album for $5-7, rip it at the rate of their choosing without DRM and sell the disc back for $2-3. Compare $9.99 for iTunes to net $3-5 bucks at the local used music store. I’d say that is a no brainer.

    The RIAA member business model is broken and the big money reselling the same catalog over and over (different formats) is through. As a boomer I have purchased some music on cassette, LP, and CD. Do they think I am going to buy all of that again? Not on your life- sue me. How many times can they expect to re-sell us the same music? Instead of suing 12 year olds they ought to hit the clubs and sign some artists. The could actually front people money so they they can tour more widely and build an audience. The record companies used to do that, but the megas rarely do now.

    The easy money is gone. It’s time to go to work.

  4. not just because of competition with apple, or their other justification, but because they’ve tied their fate to microsoft, wma, and the soon to be defunct “play for sure”. microsoft has screwed every partner in the legit downloadable music arena. they can’t “harmonize” their tracks like real did ’cause, well, “harmony” didn’t do a lick of good for real; due to apple updating fairplay et all to block that move. who knows how successful dvd john is going to be w/his reverse engineer license blah blah, and may be breaking the law. the only solution for yahoo “no drm” mp3.

    mw “indeed” how appropriate.

  5. I’m never quite understood the issue people have with using other online download services….burn a cd, rip it back in. If you’re buying online, you don’t care too much about the quality anyway. Sheesh folks.

  6. Different Take,

    yes, my iPod is full of jazz and classical music (with some rock and blues), and it’s all in lossless.

    I think there are more of us than Apple thinks. There’s a big on-line market out there (i.e. the whole world) for quality music in a quality format.

    For me it’s one of Apple’s two big mistakes. The other one is not introducing a ‘normal’ computer, something between a mini and a Mac pro (in price and size) and with slots of course.

  7. This is a developing industry and who knows where it will take us.

    Like many, I usually only buy CDs at around $6 a piece and rip them at 192 kbps. I’ve tried lossless but didn’t notice a difference with the best system I have.

    AAC is supposed to have better compression than MP3 – won’t this affect performance at the same bit rate?

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