Variable pricing hitting iTunes unit sales, revenue — is anyone surprised?
You really have to give the record labels credit as they have managed to bugger the one segment of post-Napster retail music that was delivering growing unit volumes and revenues—an objective lesson in why you should be careful what you wish for.
In April, Blorge reported that early indicators showed that iTunes Store variable pricing—$0.69, $0.99 and $1.29 per track—had resulted in reduced unit volume. However, in terms of revenue, though the data was far from complete, it was believed that the loss in volume was roughly being offset by higher per-track revenue.
Today, quoting music industry executives that preferred to remain nameless, Digital Music News reports that the four major record labels—EMI, Warner, Universal, Sony; which fought for years to impose variable pricing on Apple—are reaping the fruits of their efforts as iTunes unit sales and revenues are both down. Digital Music News reports:
Lower unit sales can still result in greater revenues given the higher pricing tiers. But according to the figures shared, unit sales are dipping far enough to produce aggregated revenue declines compared to the pre-variable position. The assessment goes far beyond top tracks, and includes the broad catalog of millions of songs.
Although cause and effect are tricky things, this volume plus revenue double whammy is likely the result of the record labels ham fisted pricing out of the gate. That is, from consumers’ perspective, the hoped for back catalog track price reductions didn’t materialize, meaning any search for 69-cent songs was largely an effort in futility. Thereupon, more than a few people were doubly ticked off as there was ample evidence of $1.29 songs and hardly any lower priced music.
Load gun, shoot self
Yup, the record labels, bless their incompetent souls—are screwing up the one retail music sales channel that had consistently delivered rising unit volumes and revenues in the post Napster era. Sony, EMI, Universal and Warner demanded and got variable pricing on iTunes, and here’s the result. Brilliant!
What’s your take?
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May 5th, 2009
I know I have stopped buying from the iTunes store. Although, I am not certain the record companies really care. I think they are willing to chew off their own leg to get of the “trap” Apple has them in. Greedy idiots desperate to put the genie back in the bottle. If the record companies didn’t have willing (and well paid) accomplices in the Congress, the whole mess would have been resolved by now.
May 5th, 2009
This doesn’t surprise me at all. What did they expect. If you can get a song from one site for 20 cents cheaper, why would you not do that. Loyalty only goes so far and won’t work in a struggling times. Besides regular prices being cheaper, Amazon also has better daily specials like their $5 Friday deals and their MP3 Deal of the Day, where you get a complete mp3 album for about $2 or $3 which is so much better than anything iTunes does. I pick up a few a week using the following site which tracks the deals (its the very first deal on the page):
http://www.frugalgadgets.com/
May 10th, 2009
I switched to buying from Amazon as soon as the price went up and i noticed almost nothing is priced at .69. Apple has just lost my $150 a year.
May 11th, 2009
I thought this was an Apple thing. I really did. But Rhapsody, Amazon MP3 and Wal-Mart have all had this happen to their DRM-free downloads. From what I understand, it was just basically them saying “These songs are $1.29 now or you don’t get any of our songs” and none of the retailers wanted to see what happened if they tried to call their bluff.
And this article really hits the nail on the head in terms of the whole 69¢ thing being nothing but a shallow red herring… there’s a list of thirty songs that are 69¢ at any one time; I’m finding albums dating as far back as 2005 whose six singles are $1.29.
I think what’s going on here is relatively obvious, the RIAA wants to make $1.29 the new standard for music downloads. I’ve never seen an industry treat their customers with such blatant disrespect.
August 18th, 2009
As soon as iTunes officially launched their variable pricing was the day I went back to finding alternate means of finding/borrowing music. I would spend on average about $800 to $1200 a year on music, not to mention requesting iTunes giftcards from family/friends for holidays.
I haven’t seen one $0.69 cent song to date, and now songs are being pretagged at $1.29 only moments after the album officially comes out.
For years, while other peers have been illegally downloading and pirating music and videos, I stood by iTunes still willing to pay upto $0.99 a song. Now I’m fed up. I’ve spent maybe $7.00 at the iTunes store since April’s price hikes, and it’s a shame. I’d love to support the artists, but unfortunately, the hike has forced me to burn the artists because I won’t be burned by the labels.