iTunes Sales Ban Does Increase CD Sales 185
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."
Re:From one sample to conclusion (Score:2, Interesting)
Re:From one sample to conclusion (Score:2, Interesting)
Interesting quote... (Score:5, Interesting)
This is a weird analogy... if I buy a single song... that's not like buying the upper right hand corner of a Picasso (though with some of Picasso's work I might enjoy it more). It's just like buying a single painting... you select the one you prefer and purchase it. You don't need to buy the whole body of work that an artist produces to appreciate the artist... a song I would equate to a single painting... meanwhile an album is just multiple paintings by the same artist.
At a buck a download... wouldn't they make more off of the album than at the 8 dollars they are selling the thing at Target for? How much does it cost to produce and distribute these CD's to each of the retail chains? How many of those CD's that are produced are in fact sold? So how many just sit on the shelves forever? Or... if you don't produce enough to meet demand... how much money have you lost opportunity costs?
Digital just seems so much more efficient... and this robbing peter to pay paul is silly... yes if you only sell a track in a single medium... of course the volume will rise for that medium... but in the end are you making more money or less? (Say you sold 300,000 tracks on iTunes... cost/benefit?)
Digital uptake is just ramping... if they start doing silly things like this to make it harder for consumers to get their content... either they'll go back to piracy... or it'll stop the whole legal digital distribution before it's even had a chance to become mainstream.
Need broader statistics to be meaningful (Score:3, Interesting)
It therefore seems hard to argue that file sharing and digital distribution has a negative affect on music sales.
Re:Liars, Damned Liars and Statisticians (Score:4, Interesting)
"They did that deliberately to get numbers like that so that they can use these misinterpreted numbers in their propaganda machine."
There, fixed that for ya
The Real News Here... (Score:2, Interesting)
Why dont they have this now??? It is because iTunes is about selling players, and not about revenue from downloading songs. The blame for this is directly on the recording studios for not making downloading of music more profitable for the internet providers....
Not a good idea to follow the movie industry (Score:4, Interesting)
If my family wants to see Harry Potter [insert episode here] at the movie theater, we'll go see it so we can have a blast sitting in the dark listening to the overly-amped up sound and get a fun thrill from the big screen.
However, if the DVD were available at the same time, we'd still go to the theater to do the family thing, then buy the DVD if we liked it.
Means this: we go to the theaters to see the things in which we are interested - irrespective of DVD availability. We then wait with anticipation for the DVD for a release (and generally buy it on the day it is released) if we really liked the film. What I'm trying to say is, if we like it enough to patronize the film, we'll see it several times.
Enter the music industry: The industry is trying to figure out how to stay in business, and along the way, they're forgetting something critical: the fans. If the fans like it, the ones who pay for music will buy it (and some of us will buy the CD if we want to support the musician(s)). Those that don't buy music probably won't buy the downloads or the CDs.
Key point: If the artist makes the fans happy, they'll buy whatever makes the fan happy (CD or individual download). Preventing one of the means of purchasing is not helping the artist or the label. Truthfully, (this is a personal opinion, folks) if I really like a given artist, I'll buy the CD - even if there are some tunes to which I won't listen - so I can patronize the artist. If I like one tune of a given artist - but the artist doesn't generally float my boat, then I'll download the one tune and not buy the CD.
Cutting off means of distribution is not a smart business tactic.
pop music value meals (Score:3, Interesting)
This attempt by the labels to push albums is nothing new. The last time we saw, which was only several years ago, was when they were trying to stop the sales of singles. The singles were cutting into sales of albums, and the theory was that if singles were not available, then the consumer would be more likely to buy an album.
I think the more likely aspect is the key. Wiithout singles, one might be more likley to record a song from the radio or just copy it from a freind. Even then there were albums that are so bad no one wanted anything but the same album. Not even the b-side was worht anything. With singles it was more likely all parties would be compensted for the product the consumer wants, and if we dig our heads of the artistic bigotry, when one is talking about selling a million albums, we are fundementally talking about providing a product that the student wants.
So, when singles were pulled, it was a statement that the labels would tolerate more copying in the hope they would end up with increased overall profits, even if the formula used to calculate royalties meant the perfomers and other parties recieved less. I wonder if this algebra will work out in the current climate of rampant unlicensed distribution of any hit track, not to mention much more sophiticated distribution channels for used albums. Frankly there have been way too many times lately when I have gone to iTunes hopeing to legally acquire a track, only to find it unavailable or only as an album. If it is an older album, I can get it used for much less than iTunes. If it is a new album, I soon will be able to get it used. Does this help the company bottom line?
Back to the original question. If the fast food joint only offered value meals, then a person with only a burger would cause a great deal of havok at the unfairness of the situation, disrupting bussiness. And such a person would have a point. The burger is seperate, you could sell it seperately, but you choose not to. It is simply not worth the effort, despite the clear benifits.
Re:In other news... (Score:1, Interesting)
The trouble is, if one news agency publishes on the web, they all have to, because news agencies compete for readership. Because copyright is a monopoly on particular works, if your want a song or album, you have no choice but to get it from the record label in whatever format they deem fit. You can't go to the competition because there isn't any.
I think if there were two things I could change about the music industry, it would be so that artists could only sign non-exclusive contracts. That would mean that record companies would actally have to compete to earn their money.
Re:Interesting quote... (Score:3, Interesting)
The problem, however, is that this is not how pop albums are put together. Basically, they take what they consider to be the best songs on the album, and put them within the first five tracks of the cd, and then fill in the blanks with songs that very few people listen to so that they can justify charging full price for the cd. In this case, it makes perfect sense that iTunes drives CD/album sales down (regardless of the worthless statistical data in the article) because there's no reason to buy the cd, which threatens the record company's business model.
Really, my point is that the record industry has no one but itself to blame. If you produce something that people don't actually want to buy, and then package it with something they do want to buy, and then force them to pay extra for the crap they don't want, do you really think that when offered the opportunity not to pay for the crap, they wouldn't take it? I mean, doesn't it piss you off that that winter weather package on your car comes with a racing stripe and chrome rims?
Wait, Wait (Score:3, Interesting)
Ummm bigger album sales? Digital or CD, the record companies are still selling the same damn thing. Thus it shouldn't make much of a difference if the music is sold online or otherwise.
However, if this becomes widely practiced then it begs the question of "why are cd sales preferred by the record companies?" the answer would lie in the gross profit margin. One would think that digital delivery would be cheaper as the distribution channels are "virtual" and that there are no materials involved. If cd's are preferred then cd's might have a higher margin than the downloads. Then it makes us wonder why cd's cost so much in the first place.
Hopefully this will provide more fodder for the case against the record companies and allegations of price fixing.
Increased sales, but what about profits? (Score:3, Interesting)
Re:What it promotes is more illegal downloads... (Score:3, Interesting)
I recently had a discussion with a relative about her wanting to get some music off the net. I linked her to iTunes and Yahoo's music subscription service (ranting about DRM aside, it's what she wants; shitloads of music). She gave up in the end and just said she wanted free stuff like she used to get off Kazaa.
You cannot compete with that. If you tell most teenagers that they'd be better off paying for downloads, they'll look at you funny, laugh their asses off and go back to using LimeWire.
Re:Overheard at the RIAA (Score:3, Interesting)
Yep, not only that, but... (Score:3, Interesting)
If one takes the difference in downloads (1.9 million) and divides it by a typical CD cost ($15), one gets ~127,000. That's almost enough to make up for the difference in actual CD sales (it leaves a delta of ~20K CDs), with no marginal cost of goods for the record labels to bear.
It all seems like a wash to me, and of course only has any hint of significance if the two albums/artists can be considered equally in demand, a tenuous assumption.
Re:Liars, Damned Liars and Statisticians (Score:3, Interesting)
I think you're on to something, but I'm not convinced the logic works.
Print publishing has been around for a long time, and they have had a chance to perfect the pricing model. There are two questions, why are hardcover books more expensive than paperback, and why do hardcover come out first? The answer to the first is that hardcover books are a bit more expensive to produce. The answer to the second is a little more interesting. Basically, publishers are working to maximize their profit (a good example based on the hotel industry can be found in The Art of Pricing [amazon.com]). Some people are willing to pay more to get a book first, and they are willing to pay more than the difference between a hardcover and paperback copy - for example, a hardcover costs 10% more, but some people are willing to pay 40% more to get it early. If the publisher only released paperback, they would lose out on all the profits from the 'early adopters' while if they only released hardcover they would lose out on those who would be willing to pay a little less. So, release the hardover, which costs 10% more to produce, but has a 40% higher price tag compared to the paperback == more profit.
So, iTunes vs. CDs. CDs cost more to produce (like hardcover books) the question is, is the margin between "hardcopy" and "softcopy" enough that it is profitable to shift early adopters to the hardcopy version early and let the rest wait for the softcopy. I would say no, the margin per song from iTunes (or other digital distribution) is far, far better than a physical CD. Not to mention the impluse, instant gratification factor and the (likely) quicker format turnover/re-purchase.
It seems a better profit maximizing strategy for music distribution would be either an auction or loyalty based model. The first, auction, would be to have X * T number of songs available at a D * T price (loosly). So the price would go down over time and more songs would be sold. The hardcore fans line up to buy the song, but once they are sold, they're sold until tomorrow (sort of like the midnight CD release). The second, is to offer the songs only to those registered (possibly at a cost) to the fan club. They get the songs early and at a premium - but only those 'in the club' can get it first.
So, I think it is a lot like the print publishing model in as much as record companies need to find a way to charge those who want the music first more, but I don't think it is profit maximizing to do that through CD sales. CDs are a very expensive way to distribute music in 2006 - far more than the difference between hardcover/paperback books.
The labels are going to have to deal with digital distribution. And the first ones to do it will gain. Music is becoming more an more an impulse purchase, and technology is making that happen. With iTunes (and her ilk) one can hear a song on a TV show or movie, look it up and buy it before the song is over. It's only a matter of time before there are links to songs in TV shows, movies and music videos so you can buy it and download it while you watch.