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.