Apple Is Now the #1 US Music Retailer

Quantrell writes "A leaked e-mail shows that Apple hit the #1 spot for music sales in January. The article speculates that consumers cashing in their holiday gift cards may have played a role; but of course Wal-Mart and the other retailers sold gift cards too. The news is a mixed bag for the record labels. 'For the music industry, there is a dark side to Apple's ascension to the top of the charts. Buying patterns for digital downloads are different, as customers are far more likely to cherry pick a favorite track or two from an album than purchase the whole thing. In contrast, brick-and-mortar sales are predominantly high-margin CDs.'" We recently discussed Wal-Mart's role in the music business, back when they were selling nearly 20% of US music. For January Apple was at 19% and Wal-Mart at 15%.

Comments

Hopfully

[Anita Coney]

Now that Apple has replaced Wal-mart as the 1000 pound gorilla in music retail, maybe the company will be able to drag the music industry into the new millennium.

Dark Side for Both Apple & Wal-Mart

[eldavojohn]

'For the music industry, there is a dark side to Apple's ascension to the top of the charts. Buying patterns for digital downloads are different, as customers are far more likely to cherry pick a favorite track or two from an album than purchase the whole thing. In contrast, brick-and-mortar sales are predominantly high-margin CDs.' Don't forget that the $1 per song pricing scheme just seems to be something that Steve Jobs decreed from his high perch. I'm not saying I want this but I'll bet the music industry would favor a variable pricing per song to alleviate the cherry picking phenomenon. Frankly, I could care less about the top 40 or flavor of the week singles as that is not something I'd ever want to listen to. But I could see how someone like Britney Spears would feel the punch of fans just getting "Oops, I Did It Again" and not being forced to pay for the filler crap that barely passes as music on the rest of the album.

Furthermore, Wal-Mart has also done the same thing by basically dictating that it will start selling CDs at $9-$10 or it won't sell them at all. I'm kind of shocked the music industry just sat back and let that happen (even though it joys me to see people able to buy Beatles albums at a decent price). I mean, why should Wal-Mart be able to dictate MSRP? Oh, that's right, they are the all-encompassing Wal-Mart ... they probably dictate how much I pay for milk at the local grocery store some how.

Either way, I find it humorous that what seems to be a 'dark side' for the RIAA is actually beautiful for the end consumer. I wish the RIAA would step back and look at how they could maximize profits now that distribution could be digital. Would I still be spending ~$20 a month on music if each song were ten cents? No, I'd probably go nuts and be spending $50 a month and I bet people that spend no money on music would start to slowly $5 or $10 for some popular albums. Just a though, I really wish they would look more at maximizing profits by lowering cost on something that can be copied for free and distributed cheaply.

I am an indie musician with music on iTunes

[New_Wave_or_Truth]

I get $0.87 to every $0.99 download, and all I did to get my independently released tracks on iTunes was register with a distributor, who handles it all for only a piece of that 12 cents.

Re:So what?

[Lord Flipper]

Vinyl records are much more rugged and CDs even more so, but the percentage for breakage doesn't reflect that.

Spoken like someone who never ever worked in the record business, specifically retail & shipping. Ever heard of warpage, bro'? Like, due to 60 shrink-wrapped'records being jammed in every box (standard), high heat, back of the UPS truck? No? Well, back in LA and all over the South we had tons of records that never made it to the shelves. Did they 'break'? Well, no, not exactly. They warped, to an unplayable state. Period. In the early 70s some of the Indie labels and European exporters started using 'loose' wrap, to avoid a a lot of the warping. But that took up space in the standard boxes, so the Big Labels (in the US, UK & Germany) never did get on board with that.

CDs? I wouldn't know, I went back into stagework and studios about 3 seconds after CDs started moving in the shops.

Don't get me wrong, the labels are the most organized gang of corrupt cocksuckers you ever want to know, but the 'breakage' thing did have real relevance after the vinyl content dropped, and the use of tight shrinkwrap became dominant.

I know the allowances for 'returns' on cassettes was much lower than the percentage on LPs, also.

"Breakage" was a concept that retailers had to fight for. The Big Labels didn't just cough it up out of the goodness of their hearts, and it was only after the fact that the Labels realized they could cut corners on inventory & accounting, by just giving all the jobbers and retail chains the same deal. But the retailers were 'caught' between US, the music fans, and THEM, the artists... and as a result, people used to hate the retail chains (I know I did, I worked for a few big ones), but the reality is, we the fans, AND the artists, had the same, common enemy: The Labels... not Sears, or Tower Records... not The Whorehouse (Oops, I meant 'Warehouse'), and not even Apple or Amazon.