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%.

Article is wrong .. M

[quo_vadis]

As of Feb 26 2008 iTunes is the #2 retailer in the US. http://www.apple.com/pr/library/2008/02/26itunes.html [apple.com]

What the article is talking about is a 1 week period in January (most likely caused by all the people using their Christmas gifts of iTunes gift cards) where the store sold more music. Overall though, it still remains number two.

Re:So what?

[houstonbofh]

Has Apple even been able to break the RIAA, "our way or the highway" rule and sell both RIAA music and independent music?

Apple will sell just about anything. Several talk radio hosts have regular iTunes paid downloads, and none of them have RIAA contracts.

Re:So what?

[UnknowingFool]

Right now, the artist still gets the RIAA shaft from Apple the same as they do any other music store money wise.

Actually, artists got it worse. Theoretically artists should have benefited financially from digital downloads but the opposite is occurring thanks to the labels. Apple takes their $0.29 from every $0.99 track to pay for the hosting, distribution, credit card fees, etc. The remaining $0.70 goes to the label to take their cuts before passing the royalties to the artists. However, the labels are taking their cuts as if the sale was a physical medium and are still charging the artists for manufacturing and distribution costs. Manufacturing costs no longer apply, and Apple handles the distribution. But I'm sure somewhere in the fine print of the record deal that allows the label to charge for whatever they want.

Has Apple even been able to break the RIAA, "our way or the highway" rule and sell both RIAA music and independent music?

I'm not sure the amount of independent artists that Apple has but a few years ago they signed some major indie labels. [apple.com]

Re:Why no album discount?

[Rude Turnip]

Albums are discounted to an extent. For any album with more than 10 tracks, you're still paying $9.99 (with few exceptions) for the album. If you download a few tracks and want the whole thing later, you do not pay for the same tracks twice. It used to be that way on iTMS and it was as annoying as hell. Sometime in the last year or two, iTMS was updated to let you "fill out" the rest of the album.

As for you second comment...you can use playlists to keep albums in order. When you want to randomize playback in iTunes or with an iPod, you can have it "randomize by album" instead of randomize all songs. That way, an entire album will play back, but the next album selection will be chosen at random. Also, you can move a slider in the preferences menu to play "similar" songs more often together when you use random playback.

Re:Hopfully

[chaim79]

They don't need to, Apple has already anticipated this. Parental controls can be setup, kid cannot purchase any music listed as explicit (they do mark such music), or movies rated PG13 or higher (or whatever you set it at). It's not that difficult to setup (naturally for an Apple product) and works well. http://docs.info.apple.com/article.html?artnum=302251 [apple.com]

Re:That's what Amazon is for

[OiBoy]

I buy DRM free from iTunes. It's called iTunes Plus.

Re:Hopfully

[AaxelB]

Sure, you can vote for Amazon, but that would just be throwing your vote away.

How on earth is it throwing your vote away? It's not a winner-take-all system, you get exactly what you vote for. I vote for DRM-free music from Amazon, a company that I like and has almost never significantly pissed me off. And you know what? I get that DRM-free music from Amazon. It would be like voting third-party if you could only play the music on certain, doomed-to-fail devices, but, once again, it's DRM-free. Apple and Walmart are indeed the two big players, but Amazon is only like a third-party in that they're less well-known (as a digital music retailer).

Re:That's not good enough.

[Poltras]

Except that with Apple you receive 65% of the sales of your songs. Which is better than any RIAA contract, if you are an independent.

Re:And that means

[Archangel Michael]

"Name one player besides Apple's that plays iTMS protected AAC."

I can't tell if you're serious or just stupid. iPods play ACC (DRM or not) and MP3s. They don't play WMA (DRM or not). I don't know of a single player of WMA (DRM or not). I don't doubt that they exist, I'm just saying I don't which one does or doesn't. Mainly I don't care, because who the heck uses WMA (DRM or not)?

There are other players for ACC out there, besides Apple, they just can't play Apple's DRMed version.

So, we're back the least common denominator, MP3. Of which, just about every player will play, including those purchased from Amazon.

And as for Apple's DRM, it is easily circumvented by at least two distinct techniques, one that strips the DRM from the tracks making clear ACC, and one that converts tracks from ACC to CDA back to MP3. I'll admit that is a crappy process, but it exists.

"Apple sells DRM free tracks. But how many people do you know that buy from iTMS that have a DRM free collection?"

Is the point DRM bashing (which I'll agree to) or Apple bashing (which I won't agree to) or User bashing (Maybe I'll agree)?????

I think you're confusing DRM, with Apple with the lUSERs.

"Don't get me wrong. I have an iPod. But I refuse to buy from iTMS"

That's just silly. You're complaint about Apple is really a confusion with DRM. Buy the music you want in DRM free form from where ever it is cheapest for the quality you want. Don't blame Apple for DRM, put the blame where it belongs ... with the labels requiring DRM.

Apple sells DRM free tracks, not all tracks are DRM free, but that isn't APPLE's fault, as Apple has clearly stated that DRM free is the way to go. Their hands are tied by the labels.

Not buying from Apple because of DRM is like punching your wife because she told you the neighbor ran your dog over.

Re:So what?

[Rimbo]

"I'm not sure the amount of independent artists that Apple has but a few years ago they signed some major indie labels."

Independent artists get what their distributor gives them. If you go through CD Baby, which anyone can do and is non-exclusive, you get about $0.63 per download.

iTunes sales through CD Baby are very, very favorable to the artist. But then, that's just the way CD Baby's always been.

Re:That's what Amazon is for

[STrinity]

I just checked the ten most recent albums I've bought to see how many of them are available through iTunes Plus PJ Harvey, White Chalk - NO Kathleen Edwards, Asking for Flowers - NO Rilo Kiley, Under the Blacklight - NO You Say Party We Say Die, Lose All Time - YES The New Pornographers, Challengers - NO The Kills, Midnight Boom - NO The Killers, Sawdust - NO Besnard Lakes, Besnard Lakes Are the Dark Horse - NO Marissa Nadler, Songs III - NO Keren Ann, Keren Ann - YES That's only 20%. 100% are available from Amazon DRM free. Conclusion - iTunes Plus is an inferior store for anyone who doesn't want to be locked in to iPods.

Re:Article is wrong .. M

[Anonymous Coward]

Actually they're talking about from a two month period.

http://www.apple.com/pr/library/2008/04/03itunes.html [apple.com]