iTunes Sales Ban Does Increase CD Sales

Guinnessy writes "According to the New York Times, some music labels have deliberately stopped selling some new singles on online stories such as iTunes or Rhapsody while promoting songs on the radio, so that listeners will rush out to buy the CD album instead. The album appears in itunes at a later date. Not everyone seems to think this is a good idea. From the article: 'The labels are shooting themselves in the foot,' says Rhapsody's Tim Quirk. However, Ne-Yo's CD In My Own Words sold 301,000 copies using this method. Chris Brown's Run It, that was in the itunes store, sold 154,000 copies in its first week. Ne-Yo's So Sick was downloaded approximately 3.4 million times on the peer to peer networks during the week of his album release while the album Run It!"was downloaded approximately 5.3 million times in the same release period."

Comments

Liars, Damned Liars and Statisticians

[fishdan]

From the article..."Island Def Jam offered a discount to retailers who stocked the album, allowing it to sell at stores like Target for $7.98 last week" This is a great example of someone making up stupid numbers. The fact that more CD's were sold because there no downloads sold makes complete sense. If these people, who were going to legitimately buy a CD could not buy it online, then they would buy it in the store. If they were allowed to buy it online, would they buy it TWICE? The important figure (which are not revealed in this meticulously researched article) is which way did they make more money or which way did they move more units. The fact that they sell less CD's when there is another format to buy the media should not be a surprise to anyone (except for record execs, who can't count).

Re:Liars, Damned Liars and Statisticians

[Dutchmaan]

From the article..."Island Def Jam offered a discount to retailers who stocked the album, allowing it to sell at stores like Target for $7.98 last week"

So one can reasonably conclude that iTunes, at least in an indirect way, is forcing labels to sell their music cheaper in order to secure more sales!

I don't think iTunes is going anywhere, but if it's presence causes labels to actually price aggresively the way it should be, then I think it's a good thing.

Re:Liars, Damned Liars and Statisticians

[afaik_ianal]

The important figure (which are not revealed in this meticulously researched article) is which way did they make more money or which way did they move more units.

But you can't just compare revenue or profit anyway. Song X frequently makes more money than song Y. That doesn't mean that X's marketing strategy is better - it may have just been a better song, or appealed more to the masses.

Re:Liars, Damned Liars and Statisticians

[bicho]

I think it is not much different than printing a hardcover first and paperback later.

Re:Liars, Damned Liars and Statisticians

[Stephen Samuel]

So one can reasonably conclude that iTunes, at least in an indirect way, is forcing labels to sell their music cheaper in order to secure more sales! I'd interpret it as: Cutting prices can increase sales.

Also not mentioned here is that the Brown album was available for download ONLY for over three months before they released the physical album. '

so what I see being 'proved' is that:

• Disallowing CD sales for 3 months cuts into CD sales.
• Cutting the prices for CDs increases CD sales.
• exhausting your Radio play before releasing an album can cut into album sales.
• Forcing fans to download music increases downloads.
• Being available online for 3 months can increase downloads.

and for number one......

Bare statistics can be misleading.

((mumbles something about hanging by the toenails and being beaten by an organic carrot))

Re:Liars, Damned Liars and Statisticians

[gnasher719]

'' Then why not just release a paperback version first with 40% higher price tag and once early adopters have wasted their money, decrease the price to "normal". Is there any reason the publisher should use 10% valuable item for the first release? If the audience is ready to buy an overpriced product, they will do it anyway regardless of were it a paperback or a hardcover. ''

Of course they wouldn't. With the hardcover book, you pay more money, but there is a perceived higher value. The customer knows that the producer does this to maximise profit, but they also get higher value.

If the publisher only produced the paperback at initial higher price, customers would just feel ripped off and boycott that product. There is a thin line between maximising profit and ripoff. If your customers think you crossed that line, you're in trouble.

Re:Liars, Damned Liars and Statisticians

[DissidentHere]

There is a thin line between maximising profit and ripoff.

That is exactly what the music industry needs to keep in mind.

From one sample to conclusion

[Opportunist]

One sample? You draw conclusions from ONE sample? Hire some statistician, would you?

There are SO many variables to be taken into account that could influence that. Do they target the same audience? To give a very drastic example, if you compare CD sales to download of a Techno song and a Country song, it does NOT matter when it comes out on which medium to predict almost flawlessly which one has a higher download and which one has a higher CD count.

Were they released at the same time? If it is released around Xmas, that would boost CD sales compared to downloads (it IS after all easier to wrap a CD in gift paper than a bunch of bits). What's the weather like on release day? Bad weather and I'd rather download it instead of going out in the pouring rain.

Do the CDs offer the same "goodies" that come with the CD? Do they both offer the lyrics in the booklet, for example, or some pictures of the artist? How about the CD cover?

So please, before drawing conclusion from ONE SINGLE sample, at least make absolutely sure that the results are comparable. Or, better, get a few 100 samples before jumping to a conclusion!

Aaaaaand, let's not forget: If it's not available from legal download... especially if the CD is DRMed into uselessness.

Who the fuck are Chris Brown and Ne-Yo?

[Radi-0-head]

And why should anyone care?

so what does iTunes to to Edison cylinder sales?

[swschrad]

hey, folks, it's epiphany time! -- the default physical medium for music sales has changed. it isn't Edison cylinders, Brunswick 77s (all "78" record makers used a different speed), 3-3/4 IPS 4-track tapes, or CDs, it's become electronic transfer.

selling CDs promotes ripping without any content copy-limiting software system. if the pinheads in Big Music had their schytte together, they'd stop shipping physical media, and sell it all online through iTunes and the like.

but all they have together is their off-key whining....

Sample OK, Conclusion NOT

[ackthpt]

One sample? You draw conclusions from ONE sample?

What they're obviously missing is that denying iTunes sales increases CD sales which translate into more piracy.

Good plan.

Re:Sample OK, Conclusion NOT

[Romancer]

I'd like to see if there are any statistics on which initial purchase method is released into the P2P arena.

If it's the CD rip that eventually gets on the networks or the iTunes. If they had a simple watermark at the end of the song that would show up in the resulting encodings and be detected they could track which method is actually contributing to piracy. If people who are more likely to purchase a CD and rip it to serve on the file sharing networks or if it's the iTunes users that serve it up. With a couple hundred songs marked and tracked that'd be compelling data either way.

In any case all it takes is one person to borrow/buy/steal/download a track and serve it up.

It makes a lot more sense to make it cheap enough and easy enough to get a song that illegally downloading it is not benificial. Not threatening them with vague lawsuites that people really don't care about. And not DRM crap that makes it better to download it illegally to use on the multitude of products out there being marketed by the same companies that restrict the customers ability to use them (cough-sony-cough).

If there were a service that let people pay a small price for music by the track in a high quality standardized format and allowed them to do whatever they wanted with it without any draconian DRM restrictions, it would be an alternative that would capture the majority of the market share overnight. And at the same time would make the p2p networks that much less attractive.
(didn't hear it from me, allofmp3)

It's not something new, but needs to be said again to these execs: Basic economics 101, if you offer an easier product at a cheaper price without a significant quality drop you will make more money in volume than your competitors.

The competitors in this case are virus ridden, illegal, spotty selection, gun to the head, can go away at any time, P2P networks.

You hear that RIAA? You could make millions happy, rake in billions of dollars in sales, have more volume with significantly less overhead and 3rd party costs. All you have to do is look at the market and act like business people and fulfill the obvious need.

You know, I have a problem with this....

[10101001011]

In scientific tests, one can take a solution, mix it in another solution, and observe the results. Then one can make a single change keeping all other variables identical and perform the same tests. Those results are (arguably), if not valid, then at least a decent indication of a pattern. This summary (and I presume the article?) attempts to use this methodology with music artists -- something that by its very definition stands itself apart from science. Just because one individual's CD sells a certain number of copies through one venue, while another does comparatively poorer through another does not mean that the results are valid.

First you are taking one individual CD's sales through a store and comparing them to another CD's sales through an online distribution. While this test is almost impossible to perform (release the song at the same time through both channels and see the online distribution win and people would say that it simply hurt the CD sales, or alternatively, vice versa), it might have been a better comparison to simply take one popular artist's newer album, release it exclusively online and compare it with previous releases. Even this is not an indestructable argument, but at least you would be comparing Granny Smiths to Red Delicious, and not fruits to vegetables.

Now I am by no means a scientific person (having a greater interest in history) but it astounds me (through every century) when one side tries to sound scientific by saying, look! ho! this way works better and one can see it conclusively because the stars are in the sky and not in the ocean! This was pretty much a complete red herring of an article.

amazing, headline news

[l33t-gu3lph1t3]

The only possible conclusion you can get out of this is "customers don't buy the same product twice".

Wow, that's so Statistical!

[twifosp]

So two different CDS with two different audiences, with two different marketing strategies, had two different outcomes? DUH?

This fails so many statistical tests for process control and would never even be eligible for something like an Annova (test for statistical difference) tukey-kramer test. They find one demographic of people, internet buyers. Split them in two. Offer the download to 33% of the group, deny the download to 33% of the group, and let the other 33% have the choice to steal/buy online/buy the cd ect. All the while exposing them to the exact same marketing, radio singles, and ensuring their purchasing habbits are the same. Only then can you even begin to test which group is statistically more likely to alter their purchasing habbits.

In other words, doing all of the above is hard and takes time and just coming up with bogus conclusions is so much easier.

I can't wait until the RIAA gets so much control over the music industry that they legally charge each user every time they listen to the song. Hell, they'll charge the user 1 cent per second the song is played. It wouldn't be fair to pay the same price for a 2 minute song and a 4 minute song would it?

When that day happens, and it looks like it might, the RIAA will finally implode and independant music will return in a blaze of glory. Or be outlawed as a potential communication medium for terrorists. One of the two anyway.

Not only what I said before but...

[tfcdesign]

CDs are easier to pirate than DRM protected iTMS songs. At least at the same quality.

Shocker

[Cyberllama]

You mean when a band puts out a cd with one good song and a pile of crap that cd sales are higher when people are forced to buy the entire cd to get the one worthwhile song than when they can simply buy that song alone.

The real story here is not "Itunes hurts cd sales" its "Itunes promotes better music". The a-la-carte style of music downloading that itunes offers punishes crappy cds for sucking and rewards good ones for being good.

So, where should I buy music?

[Slipgrid]

Here's my dilemma. I like music and I like my computer. I used to like CD's, but I like my computer more than I like CD's. I don't like the mixed-bag-of-root-kits-and-DRM that CD's want to put on my computer, so I don't buy them. I also don't like the DRM from iTunes, but at least from them I know what I'm getting. But, I've never bought from iTunes. So, where should I buy my music? The answer is, I don't buy it at all. I would pay for it. I want to pay for it. I used to pay for it. But, I don't like my toys to be broken by greedy strangers... Ok, extremely wealthy and greedy strangers. So, now, I still get my music, and I don't pay. If the record companies still sold a product that wasn't broken, or a risk, I'd like to pay them, or better yet the artist, for the music. But they are not offering something I'm comfortable with, so they get none.

I don't get it.

[jcostantino]

They're proud of selling a CD for $8 at Target with all the costs of shipping, printing, materials, markups, etc... instead of selling it for $9.99 on ITMS where it's (from what I recall seeing, I could be wrong) 90% profit for the publisher?

I don't get it...

Only if.

[Belial6]

Only if they drop a bunch of letters out of the book to make it take less space, then make you use one of those little red filters to read the paperback so that it would be difficult for you to go and photocopy it. ;)

Missing numbers...

[drew]

Regardless of one's ability to draw meaningful conclusions from one datapoint, they also left out another key figure.

Ne-Yo's CD In My Own Words sold 301,000 copies using this method. Chris Brown's Run It, that was in the itunes store, sold 154,000 copies in its first week. Ne-Yo's So Sick was downloaded approximately 3.4 million times on the peer to peer networks during the week of his album release while the album Run It! was downloaded approximately 5.3 million times in the same release period.

OK, so how many downloads from "Run It" were sold in the ITunes store during that time period? If it was only about 50-100K songs, then they may have a point, but if it was something along the lines of 500K songs, then all they did was to give up some profits on CDs to make the same money on downloads. So, yeah, Duh, people are going to buy less CDs if they have the option to buy a CD or buy from iTunes than they will if they only have the choice to buy CDs.

It's like a deli that sells both ham and roast beef sandwiches complaining that they don't sell as many ham sandwiches as the deli down the street that only sells ham sandwiches. Big deal...

Poor summary

[dilby]

Seems to me the issue here is not about delaying the release of songs on itunes increasing cd sales but not releasing songs as singles increasing album sales. The fact that the song wasn't released on itunes etc was only due to the record company wanting to bundle the song with the rest of the album, because surprise, surprise they make more money.

It looks to me like the record companies took a page from Microsoft's book.

Re:so what does iTunes to to Edison cylinder sales

[Anonymous Coward]

The answer: even though legal online music is DRMed, the labels and RIAA do not look kindly on iTunes or other online distrubution precisely because they would lose control of distrubution. They love control, they sleep with control, they make sweet anal love with control when things go their way, control is within and without them. They can't think of having it any other way. In fact, they have a very hard time thinking that technology hasn't progressed since the 50's.

With online distributors, they lose control--they rely on another company to distribute their product because they were to narrowminded to innovate the idea of legal online electronic dirstrobution in the first place, even though they had the best chance of anyone to successfully pull it off... The industry as a whole will never move to such a system. We'll see music on DRM'ed holographic data crystals before they'll sell all of their music online, providing the whole industry dosen't collapse first.

Correlation and Causation

[Dalroth]

Repeat after me... Correlation is NOT causation!

Thank you,
Bryan

Re:Oh, yeah...

[JourneyExpertApe]

That's what I always say to enviroweenies whenever they talk about global warming. I mean, can you point to any other examples of Earths that have experienced rapid rises in temperature, CO2 and other greenhouse gases in response to human activity?

What about the artist?

[GoNINzo]

Ne-Yo's CD In My Own Words sold 301,000 copies using this method. Chris Brown's Run It, that was in the itunes store, sold 154,000 copies in its first week. Ne-Yo's So Sick was downloaded approximately 3.4 million times on the peer to peer networks during the week of his album release while the album Run It! was downloaded approximately 5.3 million times in the same release period.

Let's take that arguement for a second. Ne-Yo now has around 3.7 million people with an interest in his music, while Chris Brown has around 5.4 million people interested in his music. Because artists don't make much money off cd sales, they make it on people showing up to concerts and other options they have. So who is in a more actionable position? And how much money does the artist get from an itunes album sale versus a physical sale?

I can see why the RIAA is getting upset though. The artists might actually make a buck and not need a monopoly pushing their product.

Think of this logic being used 10 years ago

[ibeetle]

Can you imagine if this logic had been used 10 (or so) years ago.

Record Artist to record label: Oh and by the way I do not want my newest album on this new format... what is it called... VD?.... LSD.... oh yea... CD... what ever it is I do not want anything to hurt my album sales.

----
  iTunes is not the enemy. It is simply another delivery device to get your product to your customers. If someone buys a CD... you get money... if someone buys that same CD from iTunes.... guess what.... you get money. And sense there is no packaging, manufacturing, or shipping cost with iTunes you actually make more money. What do you care if we buy our music from Wal-mart or Best Buy or iTunes?

-----

I bet in a few weeks Island records will release a statement of retraction. Saying it was all a big misunderstanding and what they meant was unlicensed music download sites, and they would be proud and honored to have their music on iTunes.

Re:Overheard at the RIAA

[Golias]

Why in the hell is this a "YRO" story???

Do I have a "right" to pass up on the newest lump of turd to come out of Britany Spears's ass at the CD store and buy it from iTunes instead?

Is it my "right" to not have to wait a few weeks to download it from an on-line music store?

I don't get it.

The iTunes first track outsold the CD first track.

[MacDork]

RTWholeFA...

CD First:

"In My Own Words," burst onto the national album chart yesterday at No. 1, with sales of more than 301,000 copies, easily ranking as the biggest debut of the year so far. And just as eye-popping: the digital single of "So Sick" sold almost 120,000 copies in its first week, according to Nielsen SoundScan.

iTMS first:

"Run It!" was available for sale online for more than three months before his eponymous CD hit stores. During that time, Mr. Brown's song sold more than 300,000 copies. When the album finally went on sale, it sold roughly 154,000 copies in its first week.

Total, 421,000 copies for the CD first track. 454,000 copies for the iTMS first track. Yeah, the CD first album sold more copies, but that was at a reduced price of $7.98... cheaper than the 'album' is sold on iTMS. Wow, big surprise there... you lower the price of something and you sell more of it! That's news? No, that's not news... here's the big news:

So far this year, album sales have declined about 3 percent from a year ago. But if every 10 singles sold so far were bundled together and counted as albums, sales would be up about 2 percent, according to Nielsen SoundScan.

Once again, a story on Slashdot is misleading and flame worthy. It's almost like they do it on purpose to sell more page views or something... Noooo, Slashdot is 'news for nerds' and would never treat its readership as if they were illiterate morons.

Sick of the Song

[PBPanther]

Another factor that is not mentioned in this set of statistics is how long before the song was released people started hearing it on the radio.

If the song is played for weeks on the radio before it is released then people are sick of it. This seems to happen with so many new singles these days, especially from the big names. They are hyped and hyped and played and played to death so much that no one wants them by the time they are released.