iTunes sales "collapsing," blanket licensing to succeed?
By Darren Murph 
posted December 12th 2006 12:04PM
posted December 12th 2006 12:04PM
It wasn't too long ago that ole Steve opened a few of his famed keynotes boasting about just how much money was flowing into the iTunes Music Store, and now we've even got the option to snag feature films and TV shows if our wallet so desires, but it appears that even the streamlined, previously trendy iTMS may be on the decline. It's no secret that folks looking to pick up some new tunes would like to avoid DRM at all costs, but instead of seeing CD sales skyrocket, there's simply been a general decrease across the board in the whole "music buying scene." While digital downloads initially looked to fill the void, that theory seems to have been short lived; since January, the monthly revenue going into Apple's iTMS has fallen by "65-percent," with the average transaction size falling "17-percent." Notably, it's not just Apple suffering the cashflow drought, as Nielsen Soundscan reports that the digital download "industry as a whole" is steadily declining. Additionally, research has shown that the "median household" spent just "three dollars" about six times per year, showing that digital downloads aren't exactly "replacing the CD," but rather complimenting hardcopy sales at best. Interestingly, analysts are theorizing that the DRM-era may actually be winding down in favor of "blanket licensing," which was cast aside just years ago in favor of the "per purchase" approach. Discussions are already taking place in the UK to test the waters of such a bundle package, but we don't realistically expect the business model here to change overnight -- but considering the duties the RIAA wants to toss on anything digital, we wonder just how attractive a new plan will be.UPDATE: Based on Forrester's reports, the data cited was from the first six months from the previous year, which leaves open the possibility of seasonal swings skewing sales.
I blame emo.
http://img454.imageshack.us/img454/4485/itunesmusicsalesyj9.png
Not a collapse.
Not near 65% drop.
Decline from Jan to Sep 06: 30%
Sept 06 vs Sep 05 growth: 21%
Does anyone know the seasonality of CD sales?
I have to agree with the comments with regards to the quality of the music. Honestly the stuff that comes out on mainstream radio is crap and not worth much of my time. I have found that the indie artists are waaay better nowadays and really aren't that picky about drm and all the junk. Some even let users download their tracks for free. Most just have their music available on CD. So take home message for the corporate biggies...... start signing on the REAL talents!!!!! Support indie artists!!!!!
The article is just wrong. iTunes sales are not declining -- the rate of growth may have declined, but it is still growing dramatically. You can see a graphic showing how silly this all is here at:
http://www.blackfriarsinc.com/blog/2006/12/do-math-itunes-sales-arent-collapsing.html
Since the facts of the article aren't correct, I believe the predictions of the end of DRM are also premature.
Just my US$0.02 indexed for inflation.
Carl
I live on a small side street that sees over 2,000 cars a day. Since it's a narrow road with speed bumps people are forced to drive slow. Because of this I'm treated to 4-5 cars per hour driving by at a snails pace blasting "music" out of their windows (though some entrepreneurs have their speakers mounted on the outside).
When I first moved here I honestly thought what I was hearing was people speaking into a megaphone. Because it doesn't sound like music. It's people talking with repetitive beats interjected with distorted samples of music. To the untrained ear, you really do have a hard time making the conneciton, "hey that's music."
I feel for the kids who listen to this stuff, I do. Because it's such a poor example of what music could be. But it's what they like and it's why people like me haven't bought music in years. If the music industry is suffering, it's their own fault. They've alienated their entire customer based except for the impressionable kids who don't know any better.
hahah i love how the steady decline of music purchases is blamed first on pirating, now DRM, and now "analysts are looking to blanket licensing" to further subsidize their crappy product.
I say let the market speak. It's obvious that the quality of product is in decline, and sales are following. Must be convenient to always have a scape-goat. Must be even nicer to subsidize your income on your poor product with blanket licensing something which people apparently want less and less of.
There's hardly a single thing that was released in the last few months that even perked my interest slightly. It's been All-The-Same-Old-Crap™
I'm surprised that no one has mentioned the new 1 song per album formula. NO album today is allowed to contain more than a single good song. That makes the album a crappy buy. 15 bucks for one song? You've got to be kidding. I'll just download it......
Download is full of DRM and I can't stream from my PC through my xbox to my home theatre/whole house audio which is my main use now or put it on my Samsung mp3 player (which acts as a USB mass storage device).....
I guess I just won't buy it. Oh well. And I think a lot of people are falling into that same boat.
Remember the days when albums were full of songs you wanted. It wasn't that long ago. Just think back to Nirvina's Nevermind; Pearl Jam Versus; Weezer self titled; or on the hiphop side: Biggy; Tupac Makaveli; Jay-z's black album. Look at Korn; the self title was amazing, then teh second one had like 2 songs on it, the newest one had twisted transistor which wasn't even that great. The sales responded accordingly.
I remember when you went and bought an album for the art, the media, the experience. Now, you buy it for one song and a pic of the artist and it's more expensive than the old ones (thanks to all you price fixers out there)? I don't think so buddy.
I remember when prices of albums VARIED. Smaller artists had low priced albums to drive sales, and established artists had more extravagant art, stores, background info and a correspondingly larger price tag. Everything in the music store is worth exactly the same now? I don't think so buddy.
Sonni Bono Copyright Act: life of author plus 70 years? Otherwise known as the perpetual copyright is what keeps the music industry stagnant. Patents expire in 20 and innovation abounds because you need a new product before that 20years is up. If you need a new product 70 years after you die, who really gives a crap about making anything new?
The problem is the record labels are all signing watered down same-as-the-next-guy music that nobody wants.
Heres what needs to happen for me to buy music: The disbanding of the RIAA. Let the musicians sell their own music in digital form. Just a high quality MP3 that you can get from their website. The money goes straight to the artist, the MP3 goes straight to the customer with no DRM or any other software management.
I have bought one CD in the past year: Tool - 10,000 Days
I think the cause for the decline is more subtle.
When someone first gets an iPod they realize they can now carry a LOT of music with them all the time.
So they start ripping all their CDs and buy their favorite songs that they can't find on CD.
But eventually...when you've got a 1000 songs YOU LIKE at your fingertips, the desire to buy more starts to fade.
I think each person has a limit to how much music they feel they need.
I've reached my limit.
My iPod is full of great stuff that I like in dozens of genres.
Enough music that I don't get bored of listening to it.
Wow! Thats a little hard to believe. Is that all 100% accurate? Sorry, iTunes. I do admit I haven't downloaded songs from you in a while. But I am happy that I've downloaded over a hundered songs from you already!
There's a thread going on over at macrumors.com. The numbers explained are 'down 65% is the rate of increase of sales not the sales themselves'. So this is a bit misleading.
Also agree with most postings. If your music is DRMd with Apples flavor and you want to move to another service i.e. Microsoft or vice versa your doomed. Thats why I get most of my CDs from lala.com Its an awesome way to trade your CDs for others and get unprotected music which you can use whenever, where ever....
I think that you should just do whatever want you want to do and stop complaining. If you're a pirate then don't get caught. If you want high quality music then buy CDs or go to allofmp3 and get uncompressed music files...it's as simple as that.
I think if you all really hate the RIAA, then try to think up a way to weaken their dictatorship over music. I, seeing no quick way to do this, just stop complaining about them and get my music the way I want to get it.
I just installed a new system on my (itunes authorized) powerbook and had to authorize anew.. meaning I lost another life.. that's it for me, no more itunes. Moved over to emusic some months ago since I buy 100% indie anyway. DRM? Pain in the..
8000 songs from Limewire - Free
8000 songs from iTMS - $8,000-16,000
Building a music collection shouldn't have to cost you an arm and a leg.
Not to be an iTunes apologist or anything, but if you buy music as part of albums 8,000 songs won't cost $8,000. And there is the chance, however slim, that those 8,000 p2p downloads will land you with a court date and legal fees that may well exceed the cost of buying the music legally. Hey engadget - What does the finder (the smiley icon you used in the article) have to do with the itunes store or the music industry in general?
NATHAN P -
Your comment is as useless as mine.
"Perhaps you (the complainers) don't care enough about what you listen to to discover new artists."
Or, perhaps the industry doesn't exactly make it easy to do so.
What are we supposed to do, spend all of our free time searching (mostly in vain) for good new music? We've supposedly got all these radio stations, about five cable TV music channels, video game soundtracks, all these outlets for music. Here's an idea - put some good music *there*, where we can find it easily.
I mean maybe you're one of those college uber-geeks that works in a crappy little record store and thinks you're better than everyone because you own every Labradford album ever made - on vinyl. That's fine, but you know, most of us have to work for a living. And raise families. And whatever else. It's not reasonable for the content industry to expect the public to "find" good music, nor does it make much sense that the industry itself would want to use the outlets available to them to put out *bad* music. That is what they're doing, though, in large part. (There *is* good music out there in the mainstream - I'm a pretty big Evanscence fan myself, for example, and I do buy whatever they put out.) It's self-destructive behavior.
So I do think the decrease in overall music sales is at least in part due to the quality of music that the industry is promoting. I mean, why would you even put Ashlee Simpson on Saturday Night Live in the first place? Come on. That's just a waste of a promotional venue even if she doesn't get caught lip-syncing.
As for "blanket licensing" (or "compulsory licensing" as it's otherwise called), this is something The Register has been promoting for years and it's never gained much traction despite their best efforts. Even so, any support it does have seems to be limited to the UK. It would never work here, in large part because it forces all users to pay for a service that many will not participate in. It is, in effect, a "music download tax". Should my 65 year old mom pay for such a licensing scheme when she's never downloaded a song in her life?
I think it's obvious from the numbers that people still prefer physical CD's and they still prefer (and maybe even prefer more than ever) to have no DRM. Beyond that, the decrease in CD sales is easily attributable to the quality of music out there. Seriously - look at the top 40 charts now and compare them to the top 40 charts 30 (or even 20) years ago. It's ridiculous. I mean, it may be hard to believe now but bands like Led Zeppelin and Pink Floyd were once mainstream top 40 bands. Being "top 40" or "mainstream" didn't used to carry a stigma; in fact it used to be something most musical acts aspired to. Now it's almost something a band has to apologize for if they want any respect. And it's all about the company they're forced to keep on that list these days.
DRM...poor new releases....blah blah blah.
The simple fact of the matter is, when you sell a product that is even easier to rip off than computer software, sales will go down. All this stuff has happened since the advent of the mp3 and CD-burners.
I'm not blaming everyone, nor do I dispute anyone here bemoaning the lack of new music that attracts them personally. But music piracy is a fact of life. If you could walk into Macy's and then somehow duplicate clothes off the rack for free in the comfort of your own home, clothing sales would go down too.
The worst thing about this for the music industry is that most people are more than happy with 128kbps compressed music, so switching to some sort of new-fangled high-density format isn't going to work (they already have such formats, and they're not very widespread.)
I personally have no problems with the current iTMS (I dont mind the DRM) but I do think that the sales would go up if apple got rid of the DRM. I agree that there hasnt been much good music this year, but I alo think that the Music Store has a great selection of older music.
Most main-stream music does suck and the good indy stuff is hard to find because they don't play it on the radio.(and things like Pandora are still clunky and overpriced)I am sure there are tons of bands out there I would love I just have never heard of them. There is so much bad indy stuff out there (much of it even worse than the main stream crap) it is just too hard to sift through it.
Also I have been re-discovering my own CD collection. I owned about 500 CD's when I bought my first Ipod and I only loaded about 200 into my computer, mainly because of storage limitations. Now that I have plenty of room I am slowly going back and ripping the rest of my collection.
I buy from iTunes occasionally but the DRM is cumbersome (I use a squeeze box to send music around the house) and I prefer to have the actual disk as a back up anyway.
Another reason I don't buy as much music as I used to is I simply have less in my budget. I used to buy a CD a week on average but with gas and rent being so expensive I have had to cut back and music is the first thing to go.
so: Fix DRM. Make better music. Make it easier to find the good music that is out out there. lower housing and fuel prices! Apple can do all of that right?
Cant the RIAA see that nobody likes them
The Mac mini is a flop...the imac isn`t doing well....the iphone is a much delayed pipe-dream in a very crowded market. iTV ? Apple has had ONE popular product in their lousy existence. And now this , among other Jobs lies from the past like our Macs are faster and all that BS. You can only fool people for a while untill they wise up.Their crappy itunes downloads are 128 kbps...the Zune store gives you 192 kbps. Musicians who care about real music can HEAR the difference. Thumpy thump crap kids listen to could be 64 kbps and sound the same. When it comes to Apple , just remember this...
RDF(Reality Distortion Field) is the idea that Steve Jobs is able to convince people to believe almost anything with a skillful mix of charm, charisma, slight exaggeration, and clever marketing.
>>The Mac mini is a flop...the imac isn`t doing well...
How much will anyone pay for a DRM-free song? I doubt it's 99 cent. Theoretically, it's worth zero precisely. If it isn't worth zero, (search engines + blogs + social networks) will make sure it's worth zero.
And nobody wonders how much cash allofmp3.com is making?
"the data cited was from the first six months from the previous year, which leaves open the possibility of seasonal swings skewing sales"
Ya think? Personally, I think Forrester did this as a nod to Apple just as discussions are to begin between Apple and several Music companies concerning licensing terms for iTunes.
As for iTunes sales going down, given my own rather consistent purchases of over $200/mo., I rather doubt that.
I still get my music the old fashion way. Buy - rip - sell
What would you rather have?....
A) A kick ass looking music collection on real shelves.
or
B) A bunch of mp3 files locked down with DRM on your computer / iPod.
Digital music will never, ever, replace real music sales. Vinyl is gaining popularity for christs sake.
I'm not against digital downloads, I just see no benefit in them. For the same price you can have one of the best features of any room; a music collection. With better sound quality and 'use wherever you want' thrown in.
Marketing, marketing, marketing. Digital download is *crap*
I don't have room for hundreds of jewel cases, and I don't have time to keep them all organized. Not only that, but buying digital downloads is much more environmentally friendly. No wasteful packaging, no extra petroleum-based plastics used, no resources wasted in shipping. Much better all around.
I have to say a few things that came to me as I was reading the article/post.
a) The part of "...because of the 128kbps compression." argument is a bit off the mark on the large because, if you are over 30, you grew up with Walkman Tape players or similar(instead of portable CD players because you could not make a mix cd back then) and you accepted the quality as what it was. If you bought a good tape deck for your component system as well as good blank tapes you could make a pretty high quality recording to enjoy in your daily commute.
b) As stated, "...research has shown that the "median household" spent just "three dollars" about six times per year...", most people boost crap anyway, I am not surprised at all. I must say this in my defense to those who might read this and say that I have amassed a fairly serious amateur LP collection as well as CD's (combined, over 1400 albums)- and I used to love to go and rummage through record stores. Now, I couldn't care less, I would rather find it through the net .
applesucksleo seems to live in an alternative universe. which is fine, but it seems to be a place that fosters anger.
this whole article is crap. please show me where Jobs "boasts" about itunes profits. every one knows itunes makes hardly any profit and is there to help sell ipods, which do make profit.
also iTunes collapsing does't seem quite the right title when this dubious article is talking about the whole industry.
bad writing just needs a bit of good reading and we can see that this whole item is nonsense.
By the way I dont have an ipod or buy from itunes but nonsense is still nonsense,
And all those comments about only 1 good song on an album now and new music being all bad are ridiculous because the song you like I may find atrocious and visa-versa.
So, the article is silly and most of the comments are also.
keep smiling
waddo
http://www.waddo.net/
First off, in response to Zach, who said:
>8000 songs from Limewire - Free
>8000 songs from iTMS - $8,000-16,000
>
>Building a music collection shouldn't have to
>cost you an arm and a leg.
Not to stand up for the record industry, but why should it not? If we were talking about books, wouldn't you feel that you should have to pay for the books in a collection? Books and CDs are the same thing, just different medium - they're collections of artistic creations. I bet most of you, the ones with morals, would feel horrified if someone suggested you fill your home library with stolen books, and you'd look down on someone who proudly stood by his own stolen library of thousands of illicit books.
To those of you who complain that albums today all suck or only have one good song, let me give you some advice: find new music to listen to. If you only find one thing on each album you buy that you like, this is an indication that you aren't listening to music that you truly enjoy. Branch out, find artists who inspired the ones you think you like - more than likely you'll find some heart and soul there that's missing in the music you're getting stumped on today. Like ALL good things, finding good music takes some work on your part - but when you do, it's so rewarding that you'll be stunned that you wasted so much time and money on the stuff that you used to buy. Let me put it this way: I buy a couple hundred new CDs (yes, actual CDs) every year and it's extremely rare that I buy a complete dud like most of you complain about regularly buying.
excellent response tom.
Although i'm still a teenager. I have no morals, let alone a paycheck to cover actual music. So you can guess of course that i see nothing wrong with what im doing.
Rock on Tom. Rock on.
The itunes music store has sold an average of 22 songs per ipod user over the life of the store (several years).And Mr Jobs thinks everyone is going to buy a $300 device to stream media to their monitor;media they buy from his store...media I already get for free in over-the-air HDTV or is already included in my cable bill (which I can easily record to my HDD and burn to DVD without DRM)? Mark my words...the iTV is going to flop big time.All the hype on Digg won`t save it. Remember...with Apple it`s all about the hype.And most importantly , beware of the RDF.RDF(Reality Distortion Field) is the idea that Steve Jobs is able to convince people to believe almost anything with a skillful mix of charm, charisma, slight exaggeration, and clever marketing.
Shoving DRM down consumer's throats puts them off when it comes to buying music. Who knew?!
Copy protection is just stupid. Open something up and the total usage soars. Apple should have a fully open section for all new music in which the dinosaurs of the music industry are not interested. You know, I have actually bought music as a result of an illegal download.
This industry is dying for the same reason Microsoft will. Open source, open format - that's what people essentially want. I wouldn't buy an iTunes song if it were the only downloadable format available.
There's loads of decent music coming out all the time if you know where to look. Pop has always been for kids and growing out of it is just a fact of getting old :-P
As for DRM - it's totally consumer unfriendly, which makes it awful. But the alternative is relying on people's honesty to pay for music, which, let's face it, almost nobody would if they didn't have to (look up "public goods" in any economics textbook). Whatever you think of record companies, the artists need cash to survive, and gigs alone would only keep megastars like Madonna in shoes, not small-town bands. Less music would be produced as a result and we'd all be worse off.
Nobody has come up with a good solution yet...would it be madness to have to pay an annual license fee for MP3 players like the British do with TV? Or base it on hours