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Apple Sells A Million Songs in Debut Week
Scrameustache writes "According to an Apple press release, the iTunes Music Store sold over one million songs during its first week. Over half of the songs were purchased as albums, and over half of the 200,000 songs offered on the iTunes Music Store were purchased at least once.
Those new iPods are selling like hotcakes too..."
http://www.wired.com/news/privacy/0,1848,58718,00. html
Today I found a "New Music Tuesday" mailing in my inbox, from Apple, highlighting almost 20 recent (complete album) additions to the Music Store that are available as of today.
If they do that many every week, that is seriously gonna bolster their catalog.
~Philly
My understanding on this is that it has more to do with licensing of the music. It is a different matter to get US distribution rights than worldwide. I do not doubt that Apple is working to extend their rights, as the European market is significant to Apple's hardware sales, but you can't really blame them for not waiting. A big part of their leverage to get better worldwide rights as well as an increased catalog will be the success of their first steps.
Obviously they aren't having a bad start of it, and they have recieved really great press. I know people who are considering buying macs and ipods based on this.
1 million songs at $0.99 is about $1 millions/week. Assuming that the demand stays constant?which is unlikely as there was probably pent-up demand, as well as let?s give it a try users in the first week?the total revenue for the year will be about $52 million. Although this sounds like an astounding success, it is less than 0.2 percent of Dell?s revenue (FY03 revenue $35.4 billion), and less than 0.02% of Walmart?s revenue ($218 billion). And it will only account for 1% of Apple?s revenue.
Note also that Apple doesn't keep the entire $0.99 - about $0.65 of it goes to the record label.
It's important however that this is very high-margin revenue. Apple's cost of sales here is recouping the cost of developing the service, plus the bandwidth, plus the credit card processing fees, plus the cost of having developers maintain the service. This has got to be pretty low compared to pressing CDs to put into cardboard boxes - let alone manufacturing computing machinery.
And Apple plans to roll it out to Windows users later this year - which should increase the revenue stream considerably.
ASA
All employees must wash hands before seeking equitable relief.
Selling a million of any new service in this short period of anything is impressive. What other service has had similar success?
So far, this is marketed to a group of people:
Who own a Mac
AND Who own iPods
AND live in North America
What is that, 1% of Apples 2% market share?
Once it hits PC's with other players, it could become huge overnight.
Even if the company "only" makes $30 million...
What has happened to the world when making "only" $30 million is a bad thing?
Besides the service only just started last week, normally sales of a new service start out slow and grow as people test the waters and if it's safe, others jump in. There is little word-of-mouth advertising yet. And up till now, who needed an overpriced iPod? Now it seems like a better investment.
If the price of entry for unsigned artists is is the cost of studio time, plus paying Apple for server space there could be MORE alternative artists in the mix. This is assuming the labels haven't locked out the independents.
There is much more good potential in the service than you give it credit for.
If tyranny and oppression come to this land, it will be in the guise of fighting a foreign enemy. - James Madison
The price of most albums is $9.99, unless there are fewer than 10 tracks. In that case, the total for the album is adjusted down. The remaining case is for "double CDs" which typically cost 2*$9.99
Now, please quit with the "N_songs * $1 > cost_of_album" foolishness.
There is room for improvement with the selection. That having been said, the experience is very pleasant and purchases are smooth and easy.
The REAL accomplishment is that Apple has apparently figured out how to do Credit Card Micropayments.
DeanT
Then why do people always protest Microsoft's bundling of browsers, media players, etc with the OS?
If Apple is "good" for bundling applications and not giving consumers the choice (for example, the music purchasing ONLY works with iTunes), then why is Microsoft "bad" for including IE and Windows Media Player with the OS? And can you imagine the outcry if Microsoft began selling music inside Windows Media Player? Slashdot would be screaming about the monopoly.
The difference is that one company is an illegal monopoly, convicted of antitrust violations, and has a history of using its monopoly power to eliminate all competition in areas it enters with new products, whereas the other company is a small niche competitor that poses no threat to dominate the personal computer market and stifle innovation.
It may not be an ideal world, but them's the breaks.
AAC is not a proprietary format. It's the audio component of the MPEG-4 standard.
You can tell a great deal about the character of a man by observing those who hate him.
'nuff said!
Alison
"It is a miracle that curiosity survives formal education." - Albert Einstein
That comment is so amazingly ill-informed, everybody here is a little dumber for having read it.
The RIAA != the record labels. Yes, they have spent a lot of their resources fighingting Napster, Kazaa, etc., on behalf of the labels, but it also represents almost everybody else in the music recording industry, including artists. In addition to enforcing copyrights, they help establish industry standards (such as that little pre-amp that goes into turntables... okay, younger /.ers might need to ask their fathers what a turntable is.) Saying that this will hurt them is like saying that putting a dent in Sony's hardware sales will somehow hurt the IEEE.
Furthermore, all of the music sold on the iTunes Music Store is licensed, and those license fees are managed by... guess who? That's right, the RIAA.
If this takes off, it might kill your local record store (if Best Buy had not done so already) but it will not make the RIAA go away.
Information wants to be anthropomorphized.
There's a less invasive way to demonstrate that the m4p file contains the name/address of the purchaser: buy a song and e-mail the file to a friend who also has a Mac and iTunes4. When they double-click it open, they will be prompted to "authorize" their computer to play this song -- and the text of the prompt includes the e-mail address of the original purchaser, and prompts for their password. That the files contain the identity of the purchaser is not really a secret, especially given that it displays it prominently in the password challenge dialog box when m4p files are moved to a new computer. I found this the first time when my wife mailed me some songs she had bought, and I had to ask her to come over to my computer and enter her password.
But the easiest way to see that the songs contain the purchaser's name is this: open iTunes, click on a song you've purchased, and choose Get Info... and there's your name!
-Mark
an that is just to apple user and no one else. imagine if this had been world wide.
On the otherhand 1 million sales is a tiny drop in the record sales bucket. if there are 1 million songs sold that's less than 100,000 albums sold. which means over the course of a year that will mean about a million album sold if they can sustain this pace. that's trivial. how many times a year does a artist release an album that goes "platinum"? seems to me they are many every year, some from each record label. thus if apple sustains this pace it will only contribute a single platinum album. Of course there may be a large multiplier effect if the profit margins on this are higher/lower than normal album sales.
What this really shows is how utterly insignificant all of the the other on line music sales were prior to this. they didn't even register: a single mega-record store in NY city could outsell all of the annual online music in a good day prior to apple's involvment. likewise selling CDs by mail also vastly exceeded this market.
heck AOL sent out more of their free trial disks than that!
on the otherhand, once this hits the rest of the world and once this hits the windows world. now were talking a large dent in the sales of music online. again remeber their may b eprofit margin mulitpiers too. this will be true in places that yearn for "pop" music but dont have such good access to music stores as in the US. likewise, world artists will be able to crack the US market if apple lets in lables that lack US distribution systems.
now lets talk about how intrusive the DRM is. its not bad compared to all previous efforts. you can keep your music on a CD so insome sense you own it. but re-ripping it is supposed to be not so good, and thus since digital music is the only way you will be using music in the future having an unrippable high quality CD is not as good as it seems. Apple's tech knowledge base warns you to deauthenticate your mac before you reformat the disk or sell it. its not clear but it seems to imply that you could lose one of your 3 authentications if you dont.
Apple warns you they are free to change how they authenticate your music when you install it on a new mac any time they wish.
This lack of clarity over the authentication protool has me worried but not hyperventilating.
legitmate questions include:
1)how do I authenticate my music on future macs or ipods if mac sells its music store to someone who either goes out of bussiness or starts charging fees to authenticate. (dont laugh mac switched its bussiness model from free to pay for mac.com and claris works)
2) Someday i'll want to keep my music on my phone, credit- card computer, ring, implant, etc....will future itunes allow me to move music to non-mac music players?
3) if my computer is lost, the mother board dies, my hard disk crashes, or a virus eats it, or my employer seizes it before deauthenticate have I lost one of my authentications?
4) what if I go bankrupt and cant get a visa card. how do I maintain a music store account so I can authenticate?
5) in the future, will legacy macs that cant run the latest OS also not be able to de-authenticate?
As I said I'm not hyperventilating, and like 8-tracks and vinyl I dont have the unreasonable expectation that I wont want to replace my music media in the future. but I dont want to be forced to because say apple goes out of the music bussniess.
and yes I realize I can make an audio CD but its not the same as having bought a CD in the store since the store bought CD will rip to higher audio quality for use in digital players (and I predict in the future all useful players are going to be digital-- there wont be many CD players except as ripping devices)
Some drink at the fountain of knowledge. Others just gargle.
Really?? Then why am I sitting in the building right now, working away?
Apple's G4 desktop/server manufacturing in Cork is still running along. In fact, I was out on the production floor 5 minutes ago .. :-)
BTW - guess where the European support centre is? Cork, Ireland.
Alison
"It is a miracle that curiosity survives formal education." - Albert Einstein