Excerpted from WSJ, “Music Labels Push Extras with iTunes Pass” By Ethan Smith, Apr 15, 2009
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Record companies, weary of scraping by on 99-cent song downloads and dwindling CD sales, are trying to dress up and reimagine their most profitable product — the album — to woo music fans on Apple Inc.’s iTunes Store.
On Tuesday, Sony Corp.’s Epic Records plans to release a $17 iTunes “pass” for pop band the Fray. The pass delivers songs, video footage and photos, but spaces out the offering over several weeks in the hope of holding consumers’ attention and justifying the premium price …
Apple plans several more subscription-style passes in the coming weeks.The offer is part of a broader strategy among record labels as they try to adapt to a retail landscape now dominated by the iTunes Store, which has become the world’s largest music retailer.
While iTunes has thrown the music industry a lifeline by getting listeners to pay for a product that many had been getting free via illegal file-sharing, it also has created a new set of problems for record labels. The vast majority of iTunes sales are for single-song downloads, while higher-priced album sales have dwindled. Record companies are desperate to find ways, including re-pricing songs, to hook consumers on bigger-ticket products that deliver higher margins.
The release of the Fray’s iTunes pass comes the same day that song prices on the iTunes Store are set for an overhaul. Instead of the longstanding across-the-board price of 99 cents, songs will be priced on a three-tiered system, with new releases or hits costing $1.29, and older tunes at 69 cents. Those occupying the middle ground will still cost 99 cents.
The four major-label groups have been calling for such a shift so they can make more money on their most sought-after releases. But even so, many in the recorded-music industry view consumers’ gravitation to song-by-song downloads as a major economic problem. Among other things, major labels can’t sustain their global marketing and physical distribution infrastructures with transactions that net them pennies apiece …
Though CD sales still account for around 80% of retail music sales in the U.S., they have fallen 20.3% this year alone … Adding in digitally downloaded albums, sales are down 13.5%, compounding a 45% decline in album sales since 2000 …
One downside to the pass idea: It’s something of a grab bag. Fans don’t know exactly what they’ll get. Still, the price isn’t that much more than the cost of many full albums …
Apple has begun offering fans other incentives to trade up from individual songs to full albums. A feature introduced in 2007 called “complete my album” allows a buyer to apply money spent on individual songs toward the cost of the full album it came from …
Eddy Cue, the Apple VP who oversees iTunes, says that “once [an album] gets out the door, you can’t update it, you can’t refresh it, you can’t do anything to it.” But the add-ons allow music companies to keep it new for a longer period.
Edit by SAC
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Full Article:
http://online.wsj.com/article/SB123906011712694965.html
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May 1, 2009 at 10:36 am |
Hey, I have an idea: produce an album that doesn’t have 2 great songs and 7 crap songs and then you will sell the entire album. Better yet, wait to release the album until it has 15 great songs on it and I can justify spending $9.99 for the album vs. $14.91 for the album bought piecemeal.
It used to be that when you bought an album, you expected to get a bunch of lousy tracks. But it was the only way to buy the album and the record companies pushed the lousy tracks to get enough songs to release an album. Today, customers don’t want to pay for the lousy tracks, and why would they?
A spaced out subscription is irritating. If record companies want to keep the profits up by selling albums, they should produce a better quality offering with better music or more good tracks. Better yet, they should consider scrapping the outdated album model. The music market has evolved.