Thanks, Apple: Universal Music’s digital sales increased 33% in first 9 months of 2008

“Universal Music Group saw sales drop 6.2% in the last quarter, parent company Vivendi disclosed yesterday. But that’s not as bad as it looks: Strip out the effect of currency fluctuations (chiefly, the rise of the U.S. dollar), and UMG’s revenues actually increased 1.1%,” Peter Kafka reports for AllThingsD.

“What happened? CD sales are still declining, of course. But Vivendi said the rise of digital music — that means you, Apple — is finally beginning to balance out some of the decline. Digital sales increased 33% in the first 9 months of the year, the company said,” Kafka reports.

Full article here.

Apple dominates the online music market, accounting for more than 70% of worldwide online digital music sales; it’s the largest legal music retailer in the world. Imagine how much better (even) UMG could have done if they’d abandon their quixotic quest to damage iTunes Store by withholding DRM-free music while colluding to offer it to every also-ran online music outfit on the planet.

Steve Jobs ought to lay down the law to these thieves if he’s really serious about wanting to remove DRM from music. Enough already.


  1. Steve’s got ’em by the balls, now.

    He should step up the fervor behind any demands he has (DRM-free music, OTA iTunes music and ringtones downloads, ringtones for every song in the store, etc.) before other stores like Amazon gain real traction. They need iTunes now more than they ever did.

  2. What’s amazing is that the music companies haven’t calculated the immense cost savings they realize by not having to press CDs, package them, ship them, replace damaged CDs, etc. All they have to do is upload the music file to Apple and wait for the cash to come in.

    If I were in charge of a music company, I’d be taking my entire old catalog, digitizing it, and creating a huge marketing campaign about how you can get all of your old favorites, DRM free, on iTunes just in time for Christmas. Maybe even partner up with Apple on a special iTunes/iPod pre-loaded Oldies but Goodies promotion. Talk about free money.

  3. I agree completely. I don’t buy non-iTunes-plus music anymore, and I don’t encourage anyone to either. In fact I’m less likely to give iTunes certificates (or any music purchases) as gifts until the studios get over themselves and make the music available as non-DRM. I don’t want to be a pawn in their power-game – I want to get the music I want when I want it, in open format.

    Well, they’ll figure it out eventually. Or continue dying out. I just hope they hurry it up, whichever route they’re going to take.

  4. The thing is, Apple has no great business incentive to get rid of DRM. Besides Steve Jobs writing an “open letter” for some great PR against the record labels, I don’t think Apple is really pushing the going DRM-free issue too much.

    > Imagine how much better (even) UMG could have done if they’d abandon their quixotic quest to damage iTunes Store by withholding DRM-free music

    “Quixotic” is an accurate description, as it is obvious that having DRM in place is not hurting iTunes Store sales, because Apple’s DRM is mostly invisible and seamless for iPod users. Most customers do not even know or care about “iTunes Plus.”

    If Apple was allowed to go 100% iTunes Plus tomorrow, all that would do is increase Apple’s bandwidth costs (because the higher kbps iTunes Plus files are twice as large) and allow competitors to advertise their non-iPod music player as being “100% compatible with iTunes Store music purchases.”

    Sure, Apple’s iTunes Store market share may rise a few points, but the iTunes Store is mostly a value-added service for iPod customers. It is not a profit center for Apple. It would not significantly change the number of iPods being sold, and that’s where Apple makes profit. Those few extra points in iTunes Store market share would come from users of other non-iPod players using the iTunes Store for the first time.

    Apple wants Amazon to succeed in selling digital music. Amazon sells a ton of iPods for Apple. Amazon and Apple are partners where it counts, not competitors. As long as most Amazon digital music customers are playing those songs on iPods, Apple wins and Amazon wins. So Amazon is motivated to sell more iPods for Apple, and Apple is motivated to not get in the way of Amazon succeeding as a digital music retailer.

    Instead of intentionally withholding DRM-free music from Apple, the record labels should be insisting that Apple ONLY offer 256 kbps DRM-free files. That would “hurt” Apple by increasing Apple’s expenses for running the iTunes Music Store and cut the iPod to iTunes Store connection. Maintaining the status quo only serves to maintain Apple’s dominance in digital music sales.

  5. And if the industry as a whole would pull it’s collective heads out of each other’s butts, they could be working on sells dollars returning to a working model were by A&R;expansion and the discovery of real talent could take place again.

    The Industry needs to first standardize the digital format to say FLAC.
    Wipe out DRM for all sales, limit rentals, paid and free streaming to 128kbps, low complexity, Non-VBS.
    As iTunes in the biggest Music Retailer and clearly the digital Music superstore able to handle a vast catalog and customer base, digitize the entire back catalogs and have Apple list and sell them in the iTunes store.
    Tier the rest of the retail channel so, that the retailers could stock and carrie just the music they could sell and when an artist as a new release then add their back catalog titles to the tiered channel stores.
    This is not rocket science it’s business development 101- The Do’s: Create a product standard, design and build a sales channel, develop the next big thing for your product. The Don’t’s: worry about other’s setting or driving your plan off course, let someone else develop and hand you the model, let their be customer confusion because of conflicting products or services, stop listening to what your customers want and will pay for, do nothing, sale a poor quality non-standardized product, insist on selling a product that the customer does not really want to buy.

    Cut the crap celebrity artists and sign some real musician artists like record companies did in the old days.

    I have a very long list of things that will fix the music industry but, who cares any more even the industry has given up on itself.

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