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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..."
I think the model may work. Let's hope it torpedoes the RIAA completely.
http://www.wired.com/news/privacy/0,1848,58718,00. html
Offerings on P2P networks have almost tripled!
If this is Heaven I'm bailin out! I cant tolerate this ol tin-tub, so fulla trash and rats...
Apple has found something to make it profitable. Quick sell the hardware side of the business.
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
Most people aren't thieves. The merely want their content delivered the way they want it. It should be simple for a company to offer a better downloading experience then a decentralized p2p. I'd be willing to pay if the offer me more value then p2p programs. By that I mean easier searchs, high quality files, ability to find related music, and better availibility. RIAA has really been doing nothing but shooting itself it's foot and watching it bleed.
If they weren't restricting to credit cards with a US billing address. Like VISA isn't the same globally?
Ralf
The trouble with the world is that the stupid are cocksure and the intelligent are full of doubt.
-Bertrand Russel
How much of this success is due to this being a truly significant advance in implementations versus Apple simply having a heavy presence in the market?
I'm not trying to sideline the significance of the success, I'm just questioning why it is really successful. From what I have heard, this is not all that much different than approaches that others took earlier (Didn't eMusic, the popular word among those that don't like iTunes, originally sell per song?).
Alternatively still, maybe the market is just now ready for such a store model as this. Timing is, afterall, very important in delivery of a product to market. Too early can be as devastating as too late.
well if you read the articles you will see that Apple's music store sold more songs in a week than the others have in months. Ignore the little Apple icon if you must and see it as *somebody* has possibly finally figured out a way to sell music downloads that people like. The question is how will the sales be in a few months. The Apple policy is a lot more reasonable than anyone else. None of the other services let you put the songs on a portable MP3 player, let alone burning it to an audio CD (which strips the DRM).
In a nutshell, you can play your music on up to three computers, enjoy unlimited synching with your iPods, burn unlimited CDs of individual songs, and burn unchanged playlists up to 10 times each.
You can "authorize" and "de-authorize" individual computers. As for re-purchasing songs, just make a backup on a CD, and you won't have anything to worry about.
I'm still not sure how this service is going to make a lot of money. While a million tracks may sound impressive, you need to keep in mind that it's quite unlikely that they can keep that rate up for very long.
If the tracks were all sold as singles (they weren't) and if Apple kept all the money from the sale (they don't) AND if they could keep up their one million songs per week rate (doubtful), then by the end of a year they've made $52 million. Take out administration costs (I have no idea what they are, but I'm guessing they must be fairly significant) and the RIAA's big cut, and I'm guessing Apple would be left with somewhere in the neighborhood of $30 million after a year, and that's ONLY if they keep up the sales rate they had in their initial week every week of the year. Sure, $30 million in revenue is nothing to sneeze at, but it's not going to convince anyone that online music sales are worthwhile.
Remember, $30-50 million is equal to the revenue from a couple platinum albums, and isn't enough to finance nearly as many artists as the current model can (keep in mind that every "flop" gets subsidized by hit records). I would expect that if the recording industry were to switch to this model that MORE over-produced pop garbage would be pushed since the dramatically lower revenues would keep the companies from taking many risks with "alternative" artists. And you thought it was bad now...
How much of this success is due to this being a truly significant advance in implementations versus Apple simply having a heavy presence in the market?
The secret is in the direct tie to iTunes. It's difficult to overstate how convenient it is to be able to shop for music within your music player as opposed to fiddling with some web-based download service.
This is the kind of thing which Apple's control over hardware, software, and consumer applications together permits it to excel at. What is astonishing is that Microsoft has proved so poor at this kind of coordination.
ASA
All employees must wash hands before seeking equitable relief.
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.
There are DRM protections on the songs, but the Apple version is more laid back than anyone elses.... off the top of my head you can upload the songs to an unlimited number of iPods, 3 computers AT A TIME (you can switch that too), you can burn unlimited audio CDs "for personal use". Burning to audio CD strips off the DRM.
if you only have the songs on one machine and the machine burned up... i don't know how that works out. I guess like anything else you just have to back it up. It might not sound ideal, but if somebody breaks into your car and steals your CDs (or your house burns down) i don't think Old Man Geffen will ship you replacements for free.
It blows my mind that Apple has been able to improve on the iPod. As if the original's form factor was too thick (not quite as thick as a deck of cards), they still somehow cut it almost in half.
I played around with the new music service this week. Super impressively done. Having said that, I don't think I'll order any music from it. The record companies have shown themselves to be complete bastards for decades now, in how they screw over the public and the artists. I hate to think that Apple's now riding to this industry's rescue, perhaps only a year or two before the entire industry would go down the crapper. If there was only some way I could use this service with the bulk of the money going straight to the artist, I'd be incredibly enthusiastic about this whole thing.
I'm always thrilled to see Apple succeed at something, since I think they tend to make beautifully designed products. I just hope that this success isn't the event that keeps the parasitic recording industry form withering away.
I'm generally "Interesting," "Insightful," and even "Funny" here. What the hell happens to me at parties?
I thought this iTunes thing was full of DRM gotchas, such as having to re-buy the songs if your computer died..? Are there really that many idiotic people around or am I just misinformed?
Many people insulate themselves against such problems by keeping backups on CD.
ASA
All employees must wash hands before seeking equitable relief.
I think it might be closer to: somebody has possibly finally figured out that making products and services AVAILABLE to people who are proven to actually have the means and the inclination to ACTUALLY PAY FOR STUFF that they find valuable. Windows users buy their machines on price first, features second (and steal half their software from work third...), Linux users have moral objections to paying for stuff that's already been sold a million times, whereas Apple users understand that time pretty much equals money and would rather pay to take the hassle out of life and get on with the rest of theirs.
That was classic intercourse!
but I suspect it's due to licensing arrangements. Often the same artist is represented by different labels in different territories - he might have been signed in the UK by a small Indie, but needs big-muscle distribution to break the states etc. Big distributer sells in the US, indie still sells in UK.
This causes problems online though as customers and territories are now now no longer tied together - you could buy from whichever territory offered the cheapest identical product. One big free market.....nope, couldn't have that, could we? so that's why you need a US Visa.
They should expose their store through XML-RPC or SOAP, so that I can write my own iTunes. The money would still go to them.
(Never gonna happen, I know.)
-jfedor
There are ways out there to play AACs other than iTunes 4 or an iPod (like VideoLAN Client, for example).
...
BUT the AAC files you buy from Apple are "locked down" to your Macs (you can authorize up to three Macs to play your music), so sharing them is of "limited value", to say the least.
AND all the files you buy from Apple are watermarked with YOUR name/e-mail address -- not exactly the kind of thing that makes you eager to put them up on the public p2p networks.
Yes, you can burn the AACs as plain audio onto a blank CD-R, and then re-rip and re-encode them as MP3s and then manually re-tag them, but as a file-conversion technique, this process takes a lot of time. And uses up an awful lot of plastic, too.
Apple's done a pretty good job of making it "appropriately difficult" for you to share the music you've bought with the entire planet. Now if only I could play those AACs on my Archos Jukebox, or in my car, or
-Mark
People wanted to be able to download a wide variety of "good" music, load it onto an MP3 player and burn their own CD from their purchase. By all accounts (except perhaps those of some vocal sixteen year olds who think the world owes them a record collection) Apple has delivered this, They did the research, developed the tech, made the difficult deals, took the risks, generated the buzz, and now I hope they profit handsomely from it.
The RIAA reps the companies that get the music into the download -- engineers, producers, designers, and, yes, lawyers -- all of whom need to be paid, and will get their slice. The size of that slice is spelled out in a contract which both parties sign. Is the size of that slice "fair?" I dunno. What percentage of the price of that soda finds its way back to the chemists and bottlers? How many pennies on the cigar dollar get back to the guy rolling the leaves? How many nickels on the Big Mac pricetag work their way back to the cattlerancher? Do we stop consuming these products (and a million others) until we "ger answers?"
Say I'm a small-town chemist who just developed a new flavor -- how do I get my soda bottled and onto the shelves at the 7-11? You mean -- it's not easy?? I can't just pull my truck up to the back of ths store and stock the shelves myself? I have to make a [shudder] DEAL?! Oh, the Injustice!
Is this new venture going to change the world, overthrow evil, and bring about a Glorious Workers' Revolution? No, silly, it's gonna let you download music easily and legally onto your computers and disks. No more or less than it was designed to do.
I've never had a use for Apple, Macs, or Steve Jobs, but my hat is off to them on this.
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.
iTunes Man
To the tune of "Piano Man" by Billy Joel
Filk by Scott Taylor
It's nine o' clock at the iTunes store,
A phenomenal crowd's logging on,
There's an old man on AOL
Finding music from ages bygone.
He says, "Steve can you play me a memory?"
"I'm not really sure how it goes"
"But I typed in a track and got album names back!"
"And I'm not even wearing my clothes!"
Oh la da da diddy da da, la da diddy da da da.
Sell us a song, you're the iTunes man,
Sell us a song tonight.
Well, we're all in the mood for a melody,
And you've got the pricing just right.
Now Claude at Vivendi's a friend of mine
And his business is selling CDs.
And knows the solution for store distribution,
But he's worried about MP3s.
He says "Steve I believe this is killing us"
"All these pirates don't pay us a dime."
"Well I'm sure that you could be a billionaire"
"If you could sell music online."
Oh la da da diddy da da, la da diddy da da da.
Sell us a song, you're the iTunes man,
Sell us a song tonight.
Well, we're all in the mood for a melody,
And you've got the pricing just right.
Now Paul is an iPod enthusiast
Who listens to Jazz with his wife
And he's chatting with Maxine, who's still in the rap scene
And probably will be for life.
And the waitress is downloading Dixie Chicks
As the dial-up man slowly gets Stones
Yes they're sharing the bandwidth from Akamai
But it's better than P2P clones.
Sell us a song, you're the iTunes man,
Sell us a song tonight.
Well, we're all in the mood for a melody,
And you've got the pricing just right.
Its a pretty good crowd for just Macintosh
And the PC guys give me a smile
Cause they know that iTunes will be Windows-bound soon
If they just can hold out for a while.
And the AAC sounds like originals
And rights management isn't a pain,
And they sit at the screens of their iTunes machines
And say "Man, this is worse than cocaine!"
Sell us a song, you're the iTunes man,
Sell us a song tonight.
Well, we're all in the mood for a melody,
And you've got the pricing just right.
Grub, my man, you must be the Slashdot master of one-liners. Your Karma-to-Words-Typed Ratio must be very impressive.
If Jesus wants me it knows where to find me.
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
Have you listened to an AAC at 128 bitrate? Albums of 20 songs only cost $9.99 A ten minute classical song costs only 0.99.
You can burn them to CD in straight audio format (aiff), no DRM included. After that you can do what you want, straight to mp3 and Kazaa if you feel the need... nearly as many times as you want (playlist has to change every ten burns). Every had your CD chewed up by a dog? scratched while moving? ever get a refund? isn't that what backups are all about?
Yes you are missing almost everything... you got the 0.99 a song part correct, everything else was just FUD. Insightful my arse.
A fool throws a stone into a well and a thousand sages can not remove it.
Since when has a monopoly been bad?
-Brentan 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.
First, it's more convienent than going to a brick-and-mortar music store. I don't have to get in the car and go anywhere, I don't have to dig through the racks to maybe find what I'm looking for, and I don't have to stand in line to hand one of the pierced nation my money.
Second, Apple's pricing scheme is right on the money. Been looking for a couple of tracks? Buy just the ones you want. Want the whole album? OK then.
Third, the tie-in to the iPod is great. While I don't have an iPod yet, I can imagine how much simpler it will be to download songs from the store directly to the iPod without having to rip the CD.
I think the reason so many people steal music (and if you don't pay for it, it's stealing) is that convienence factor. I've used Kazaa on my wintel laptop and iSwipe on my iBook to grab tracks from things I used to own on tape (yes, I was probably stealing. I feel bad about it, really). It's always been a big hassle to find exactly the track I want, correctly ripped, on a site with enough bandwidth to support the download etc etc etc.
Apple has made it easy and cheap to find what I want. DRM? I don't care, because I'm not going to be reposting my songs to a P2P network. I'll be burning CD's for use in the car, and I can take a CD anywhere.
I don't forsee Apple being the big dog in the online music business forever, but, as usual, they've shown the rest of the computing world that it can be done, and the method works.
You can't have a battle of wits against an unarmed opponent.
There are three types of people posting on this thread.
1: The cheap bastards who at no price except for free, will music be cheap enough. These people are impossible to satisfy with a realistic business model.
2: The vast majority, who just care about price. DRM is acceptable as long as it's wussy and if the price is cheap enough, who cares. A little bit of inconvenience due to DRM is no big deal if the price is low enough (and mind you, the DRM on these AAC files is pretty wussy).
3: A loud minority for whom a purchase from the iTunes store is a political one, that feel supporting any DRM is supporting the powers that be, the music industry, the RIAA, etc. These are the types of people for whom any purchase can be a political statement. The types of people who berate you for shopping at WalMart or eating a hamburger because it supports the corrupt meat-packing industry. They have a point, but they are in the minority ... most people don't sit and go through a checklist trying to figure out which product is doing the most harm to which people before they go out to the grocery store and shop.
The money is at #2. #1 will never be satisfied and #3 will never shut up. Go get the money, Apple.
...I see your point, but I do recall an article (Time mag?) in which the head of Warner Bros. said the delay on including their catalog is purely technical, and that the business and legal terms are already agreed.
This doesn't cut out the retail link though. It simple eliminates your local record store and replaces it with Apple.
If people get used to this kind of thing, they're much more likely to purchase music from independent artists someday - because independent artists will probably never be able to afford to get their CDs into record stores, but it won't be too much trouble for them to get onto download services.
Sure, assuming Apple don't end up with a near monopoly. This kind of thing suffers a classic network effect - can you see people joining 20 or 30 different download services to get their music? No, they'll use the ones that are most convenient - ie the ones that are integrated with their computers. I don't know for sure but I'd bet a lot that Apple won't be allowing eMusic to plug into iTunes anytime soon.
Right now the price Apple charges for getting a track onto this service is about 30-40 US cents, something around that figure. If they become a dominant middle man, who's to say that Apple won't start putting on the squeeze to up the margins just like the big bad old record companies did? They are all shareholder owned at the end of the day.
Name your own price for songs. I wonder which tunes would command the highest prices?
Software for macs, in general, has a much lower rate of piracy than software for PCs. I personally suspect this is the case because a bigger fraction of Apple's customers are grown-ups rather than 'l33t h4x0r5. I suspect that has a lot to do with how His Steveness got the Big 5 to go along with this. I actually suspect that ITMS tracks won't find their way to p2p in droves, as some of the naysayers say will happen.
When I dropped by the Aple Store in Dallas last week to get my iBook serviced I was talking to the mac genius about the iTMS, iPod, and other stuff. He said that they have been getting calls literally all day from independent artists that want to get their music on the service.
I think it'd be great if that did happen: if people could get their music on the service by bypassing the record companies and the RIAA. It would practically make Apple into a music company without having to buyout Universal.
There are about 5 billion burgers sold each year in the US -- Suggesting a subsidy of $55 Billion.
The total governement agriculture budget in 2002 was $18.6BB, which means the chicken, hog, wheat, and soy bean producers are being completely ripped off!
Heck, McDonalds and Wendy's together have about $4.5 BB in revenue (yahoo finanace), including international sales.
Bottomline: your statistic makes no sense.
"All that is required for evil to triumph is for good men to do nothing." - Edmund Burke
Very few people have mentioned this, and I think it bears notice.
The sales so far only represent Mac owners in the United States.
How much larger is the Windows user base? We're going to have a Windows version later this year.
How much larger is the international market? Apple's going to start taking International sales soon.
On top of that, Fortune magazine reports that Apple is in talks with AOL to have iTunes be the official music player/music store of America Online. How many more sales will that be?
We're only seeing the tip of the iceberg, folks.