WiseBuddha

According to figures from the Recording Industry Association of America, digital music sales accounted for slightly more than 4% of the market during the first half of 2005, up from about 1.5% during the first half of 2004. More than seven out of 10 US digital music sales through PCs are through iTunes, a figure which grows when Mac users are taken into account, NPD said. This makes Apple and iTunes a serious player now and bigger than some traditional retailers, iTunes recently became the 7th largest music retailer in the US.

You probably heard that a teen in the US has made the one billionth purchase from iTunes. Alex Ostrovsky from West Bloomfield in Michigan bought Coldplay’s Speed of Sound…oh dear! The 16-year-old won a number of prizes, including 10 music players, while Apple has said they will set up a music scholarship in his name which I am sure he’s delighted about What happened to pure cold hard cash?

Apple Chief Executive Steve Jobs said the billionth download represented “a major force against music piracy and the future of music distribution as we move from CDs to the internet”.

Music purchases over the internet have led to a decline in CD sales in the US, according to official data. According to Nielsen Soundscan, 618.9 million albums were sold in 2005, down from 762.8 million in 2001. Nielsen also reported that traffic to the iTunes site during 2005 grew by 241%, with the number of people visiting the site growing from 6.1 million in 2004 to 20.7 million a year later. Around 14% of active internet users are regularly using the service.

Teenagers are the biggest group of visitors to the site, and are twice as likely to use it than any other group.

So what’s the problem?

Well in my view music downloaded from iTunes or any other ‘legitimate’ source is profoundly unfair and poor value for money. Music comes with a host of digital rights management (DRM) issues limiting the consumer to what they can do with the music. Check this forum which is just one example of many that supports this notion and also puts forward some interesting ideas.
If you are interested in a non DRM site that allows you complete control check allofmp3 I use it all the time to sample a new album and if I like it I buy the CD.

Agreed iTunes and the like have soothed music industry types who have utterly failed to embrace the change in consumer behaviour with any degree of pragmatism or imagination. BUT should consumers pay the equivalent of CD prices and receive an inferior sounding product and then be told what they can or can’t do with it. I am waiting for the backlash from some of the punters who have bought a billion songs from Apple. One day they are going to realize that they have spent a pile of cash building up an iTunes library and their PC is telling them that they have exceeded the number of copies they are allowed to make - they are then buggered and will have to go out and buy the CD which is a bit ironic. Plus for adventurous types you can’t even stream the ‘legitimate’ music you have purchased from iTunes around your house as the built in DRM software stops you.

There is no doubt that consumer buying habits have changed but the music industry is clinging to old fashioned revenue models built up over years driven by archaic talent deals and shareholders. Seems to me that downloaded music should be priced in order to reflect the lower file quality and used to showcase an album or artist and encourage music buyers to buy the CD. Everyone seems to have forgotten that the good old fashioned CD offers a much higher quality listening experience and leaves the consumer to rip and burn as many copies of the songs as they want. The future is going to be about customizable content on demand and I am particulalry interested in service providers who allow you to control your own playlist for a low monthly fee like Rhapsody and Napster.