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Apple Holding Back the Music Business?
conq writes "With average weekly download as of Nov. 27 sales down 0.44% vs. the third quart, BusinessWeek speculates that Apple might in fact be holding back the music industry." From the article: "As has been true since the start, iPod owners mostly fill up their players from their own CD collections or swipe tunes from file-sharing sites. Now legal downloads may be losing their luster. According to Nielsen SoundScan, average weekly download sales as of Nov. 27 fell 0.44% vs. the third quarter. Says independent media analyst Richard Greenfield: 'We're not seeing the kind of dramatic growth we should given the surge in sales of iPods and other MP3 players.'"
I use my own CD collection - NOT illegal downloads
0.44%? Oh no! The sky's falling in. Good job it wasn't 1% or we'd be back to the days of the Great Depression with music execs throwing themselves out of windows. Sheesh! 0.44% is within statistical variance.
I've got a fever and the only prescription is more COBOL.
FTFA: As has been true since the start..
What exactly is this generalization based on? It basically implies that all individuals owning an ipod/mp3 player are copyright infringers from the get go. Then, just because sales are down for a quarter, it's the sign of the Apocalypse! Are they not teaching logic in schools anymore?
If thou see a fair woman pay court to her, for thus thou wilt obtain love
The music industry's latest antics combined with their rediculously high pricing schemes(and wanting to raise them even more) that is hurting them, not Apple. If anything, Apple has helped by keeping the music industry *in check*. If they hadn't then we'd all be paying $3 to $5 a song by now and legal filesharing would be totally dead.
This piece comes off more as a paid attempt by the music industry to weaken Apple's position and power. Anyone who has been following the news knows that there is a bit of a mini-power struggle going on between Apple, who wants to keep things affordable, and the music industry. While I certainly think Apple could do better than they have been, at least they are thinking ahead and pushing in the direction music and consumer tastes are moving towards instead of clinging to the past model like the RIAA has, which has done nothing but hurt them the last 10 years.
You are who you are, let no one tell you different. But, never close your mind to a new point of view.
Everything on my iPod is either 224 or 192kbps VBR mp3s ripped with LAME. I can even tell the difference between that and source and am considering reripping all my CDs to a lossless format, which I am NOT looking forward to, as I have over 1000 CDs.
The 128kbps AAC files from the ITMS don't do it for me. They sound highly compressed and you can occasionally here aural artifacts in the high-end, like flanging in the cymbal washes. It's a lot worse with 128kbps mp3s, for sure, but the quality just isn't high enough for me to even spend a dollar there.
Free yourself. Everything else will follow.
I always buy CDs and then rip them to mp3. I'll also never buy anything from an online music store if it comes bundled with DRM. I won't knowingly buy copy protected CDs either. I'm sure i'm not the only one.
Perhaps its about time the music companies realised that people want to be able to do as they like with the music they've bought and paid for.
It's not Apple thats holding back the music industry... its the music industry thats holding themselves back with their insane protection schemes.
My lady and I have a tendency to purchase a LOT of music -- we've filled a few 400 disc changers in the past before going with a wholehouse MP3 distribution system.
Our reasons for buying less music is:
1. Dislike of Sony and the RIAA -- where we used to buy 3-4 CDs a week at Borders, we're lucky to buy even 1 a month because of their strongarm tactics. Until Borders starts carrying the popular indie bands in their area, we won't buy CDs. Some indie bands in our area have sold 2000+ CDs privately without record store support. If they expect to be part of my community, they better do more research.
2. Bigger support of the ma-and-pa brick and mortars. As our retail stores that we own lose business to the dotcoms and the super stores, we've found that by supporting other locally owned shops, we see more locally employed customers at our stores. It is the ultimate "outsourcing" to see your community spending money outside of the community to save on sales tax and maybe a 5% difference in price beyond that. 14% is still a huge savings, all from government coercion.
3. Income. Our income this year is about double the last 3, but our income in the last 6 months is down over 70%. I've been putting more of my income into real savings (gold, silver, property) to weather to storm ahead. I've also expanded my market from just-the-Midwest to the entire world, and I expect it will take a year or two to get back to my first half of 2005 income levels.
4. Quality. The quality of the mass produced records is terrible. I can't listen to the top 40 record stations at all -- every vocalist is enhanced, delay and reverb is worse than the 80s, and the compression destroys any fidelity that might have made it through the overproduction period. Garbage in, garbage out, garbage unbought.
5. Promotion. I don't feel any desire to pay $50 to see a concert of 3 bands I barely know. The indie scene is usually $6 to $12, I see 2 amazing bands and 3 new bands cutting their teeth. $2 beer, $4 calls instead of the big shows where we paid $14 for a drink recently ($110 per ticket). Without cheap promotion the records won't sell.
6. Collusion. Try to get tickets today to any popular show. The rules governing ticket scalping are created specifically to take care of the few scalpers who are licensed by the local government. It has made shows nearly impossible to attend to. One popular show we were willing to pay $60 per ticket for was sold almost entirely to 3 ticket scalpers.
7. No desire. There are so many new ways to be entertained (due to the web) that music-on-CD just won't cut it anymore. I've been talking to a local show producer who is finding better ways to stream live shows to the web in a high quality, high fidelity, well produced show. I can't wait for his work to come to fruition.
This isn't the music labels whining this time. This was Napster complaining that you can't load Napster purchased song onto an Ipod. You think the Record labels would really complain if people were to "mostly fill up their players from their own CD collections." That means more CD sales.
I'll never make that mistake again, reading the experts' opinions. - Feynman
Is something burning?
Oh, it's my karma.
The problem the music industry is facing right now isn't a decline in the sales of new music, it's just that their cash cow of back catalog replacement sales is withering. They had intended to salvage this buy going with DVD Audio and trying to get people to re-buy everything yet again.
The problem for them is that there's nothing compelling about new music formats other than MP3/AAC. DVD Audio may be wonderful, but to the average person who just wants to listen to some music in the car, or while working out, it doesn't matter. The high end audiophile types might get into it, but there's not enough of them to create the necessary economies of scale.
I would argue that Apple/ITunes is boosting new music sales because it makes it so incredibly easy. If I find a new artist, I can e-mail you a link, you click it, and 30 seconds later, you're downloading the new music. No trips to the store. No forgetting about that cool new album your friend recommended. Plus the IMixes give another way to find music you might not have bought before.
So it is good for the music industry in the long run, but they have to learn to accept the fact that the crack pipe of back catalogue music sales is running out of smoke. It's going to be hard times for them for a while because even with growing new album sales, they're likely to see an ongoing decline in revenue.
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Except that iPod Photo is to iTune download like Hard drive is to MS Windows license.
MS would like to think that they can tax hard drives (and in many cases have done so successfully).. But the idea is that the HD is more versitile.
iPod photo does pod-casts, and videos.. There are cheap products which legally let you rip DVDs and put them on your iPod.
60G iPod is a GREAT USB drive, since unlike my book-bag, I almost always have my iPod w/ me (and trust me, I have a bookbag w/ me almost everywhere).
The concept of anti-correlated economic goods is always an interesting topic. People making more money means LESS people shop at walmart or buy potatoes. Here, making a more versitle iPod means less people use their trade store.
Personally I was shocked when iPod made the photo.. They swore up and down that they were only going to make AAC-based products.. And frustratingly I understood why. No radio, no games, no PDA.. These all distract from the big money maker focus. My wife, for example, got a blackberry.. You know what she does on it all day long? Play solitaire.. No phone calls, no PDA PIM data. Just solitaire. Same concept.
That being said, I'm sure Q1-06 will be a high revenue period for the music industry when all those gift cards are cashed in.
The only real question here is whether Apple makes money on the iPod or not. Often device makers sell their hardware at a discount so they can entice people into the lucrative long-term software titles (console games is the most prevalent here). If Apple is only breaking even w/ iPod sales, then this is truely bad news for them.. Otherwise, go suck it music industry.
-Michael
In fact, the music industry would LOVE it if Apple freely license FairPlay. Then they win, and consumers lose. Right now FairPlay is keeping RIAA in check because it's basically a choice between FairPlay or stolen music for 90% of digital music player customers... so you get things like 0.99/track and such. If Apple freely licensed FairPlay, it would be you against the record labels directly, and they'd be free to charge $4.99/track for the latest pop crap because if one service didn't license it for that price, another would.
In effect, Apple's monopoly is working against the music labels' monopoly. If you take Apple's DRM monopoly away, consumers get screwed.
E pluribus unum
"You think the Record labels would really complain if people were to "mostly fill up their players from their own CD collections." That means more CD sales."
I filled my MP3 player with music from CDs I already owned. Haven't bough a single song online, haven't bought a new CD in 6 months.
Quite simply, I have enough music to never get sick of what I own. And since it's all easily at hand, I'm even less likely to get bored with it. I have downloaded some music that is being distributed free of charge by the copyright owners, but that's it.
Now that its so easy for people to access their own library, the music industry needs to do more to get me to spend any money.
"Trolls they were, but filled with the evil will of their master: a fell race..." -- J.R.R. Tolkien on Olog-hai
As has been true since the start, iPod owners mostly fill up their players from their own CD collections
... growth ... we should"... hmmm.. I think its time to hire new analysts, right? Just because someone came up with some numbers doesn't mean its a bonafide, set in stone, destined fact. If this commentary is referring just to the current quarter, then they should REALLY give themselves a kick in the pants - sure iPods and other MP3 players are flying off the shelves: people are buying them for christmas gifts. They aren't even being used yet! They're probably wrapped up and under a tree, or being shipped, etc.
I'm not sure why they are surprised with this? Did they honestly think people would only put newly-purchased music on their iPods (apparently so)? Why wouldn't I want to put all the music I already listen to on it? When the iPods first came out, it seemed like the biggest buyers were people with too much money on their hands that bought every CD that ever appealed to them, and were tired of shopping for n-disc changers for their cars and jukebox systems for their homes. The whole POINT is that they can hold albums and albums and albums of music without carrying around all the accompanying cruft (CD organizers, anyone?). iTMS was just icing on the cake, a way to explore new music and purchase a track or two without buying the whole album. If I had to make a guess, I'd say iTMS completely revitalized the 'singles' market.
We're not seeing the kind of dramatic growth we should given the surge in sales of iPods and other MP3 players
"the
PAH. I give up. Someone needs to get the music industry to grow up and stop whining that someone played with their toy: it's time for them to eat their vegetables and wear regular underwear instead of diapers. This should be accompanied by a talk about how life doesn't play by the rules you make up for yourself. Sheesh.
You say you got a real solution
Well, you know
We'd all love to see the plan
(The Beatles)
Perhaps if the music/media industry were not acting the way that they have been lately, more people would be willing to buy. With all of the restrictions placed on legally downloaded music or legally purchased music, more and more people are in fact now downloading illegally.
I personally do not download music illegally (refused to buy an iPod and can listen to my CD's when I want), but I know a lot of people who do. Some of these people used to be against illegal downloads, but due to the restrictions placed on their music when they download (number of times it can be transferred, illegal to move from this device to that device, cannot be read at all on specific device, etc.) these people have found it easier to download the illegal copies, which have no problems.
Copyright infringement is wrong, but the legal system has made it not even worth owning the legal copies. When the common person doesn't clearly understand their rights on the media that they purchased without needing to be a lawyer to listen to it, you kill the desire to buy it.
iPod did the right thing by encouraging legal downloads to begin with and quickly found a market that was previously (almost) untapped. If they keep on that path and make music downloads simple to use and simple to own, they will remain strong. If Sony and the other companies win out by making it more difficult to transfer music/media from one media to another, the industry will dwindle. I used to purchase Sony items, but why in the world would I want to do this now, if I know that they are hiding trash on their media and are willing to accept vulnerabilities on my machine, and not tell me about the code? What stops them from creating hardware restrictions in their players that will fail to perform correctly as well? No more Sony...
Hollywood is slowly drowning themselves with their current copyright war. If the media can be transferred with 1's and 0's, there is no definite way to stop the illegal copy from being made. A hacker will go out of his way to copy something if he is told it cannot be done. Even if the movie/music isn't worth the cost of the burnable DVD/CD.
Bottom line for Hollywood...Look to your consumers and make them happy. Price things reasonable, make it easy to use for the vast majority, and don't make owning a CD a legal battle. YOU need the consumer, not the other way around. People will eventually stop listening or watching if you inconvenience them too much. I cannot think of a single successful company that did not begin by believing that if they won the consumer's confidence, that they would go far. I can think of MANY that lost sight of that and have long since circled the drain, or have begun to. The ball is in your court now...
0.44%. But for an android, that's like an eternity
Seriously, 0.44%? Is that honestly an issue?
No sig for you. YOU GET NO SIG!
But iTMS is killing the industry! Legal music downloads were down a whopping zero-point-four-four per cent since the previous quarter! (For anyone who can't tell.. that's sarcasm!)
"RIAA sucks! Apple rules! iPods rule!" et cetera. It's getting old.
:)
To fill a 60 gig iPod with songs from itunes costs roughly $15 grand. And yet they still sell very well... hmmm. I suppose a lot of folks with 1250 disc CD collections (the stack of CD cases would only be about 30 feet high) will come out of the woodwork to talk about how much they love having each bootleg Phish show they own on their iPod, but the fact is that most people who have 60 gigs of music stole a lot of it. (Other anticipated responses: I use my ipod to store 8 million digital pictures of my girlfriend; I keep 60 gigs of [not copywritten] porn on it; I back up every Linux distribution ever created; etc. You're a hero, and this post isn't about you, so go have a Jolt to reward yourself!)
If quarter-over-quarter iPod sales are way up (discounted for seasonality - lots of those iPods will be Xmas gifts, after all) but quarter-over-quarter music sales aren't, record executives are right to be skeptical about iPods driving their sales. They've pretty much figured out that Apple screwed them over - the iTMS is basically an advertisement for iPods. The fact that it generates some revenue is an ancillary benefit, nothing more.
Now, I'm all for music labels as they are generally constituted now shrivelling up and dying. I couldn't care less. But for the longest time, people b**ched and moaned about how they wouldn't steal if there was a better alternative; if only some genius company would sell tracks for $1 each, so you wouldn't have to buy the whole crummy album for the 3 songs you wanted! I think I read that same post about 6 million times in 1999. Now that it's here, people are discovering that actually, free is still a lot better than $1, and so file-sharing and allofmp3 downloads keep setting all-time records.
This is bad, because the mean record industry is going to call up their cronies in congress and pass more stupid laws that will piss off everyone here. They are going to do something, because the availability of cheap, legal music isn't enough to stop the flood of illegal music being shared. So stop whining and go buy some indie records off itunes
beware the jabberwock, my son! the jaws that bite, the claws that catch!
Has it occured to the almightly number-crunchers that most of the recently purchased ipods are probably destined to be christmas/haunakka/kwanzaa/etc. presents? Maybe they should check music sales after the 'end-user' actually recieves their device... The other number-twisting fact is that many people are just upgrading their mp3 player and not needing to download much more music (how much legal music does one need???)... Just some thoughts for food. Please. I'm hungry.
Actually, the correct way of showing growth in a seasonal business is Year-over-Year, and not what this article shows, Quarter-over-Quarter, which in retail driven areas are largely irrelevant. That is always why retailers are comparing this Christmas over last Christmas, and not this Christmas over this past Labor Day. Okonomiyaki is correct in implying that one should wait until we see what this quarter (Q4 2005) looks like compared with Q4 2004 before using such growth trends in declaring legal downloads a "dying" business.