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.'"

Comments

Not in my household

[dada21]

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.

Exactly

[sterno]

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.

Re:Who wanted Apple to use DRM?

[samkass]

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.