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Music Businesses Media Apple

Apple Holding Back the Music Business? 705

conq writes "With average weekly download as of Nov. 27 sales down 0.44% vs. the third quart, BusinessWeek speculates that Apple might in fact be holding back the music industry." From the article: "As has been true since the start, iPod owners mostly fill up their players from their own CD collections or swipe tunes from file-sharing sites. Now legal downloads may be losing their luster. According to Nielsen SoundScan, average weekly download sales as of Nov. 27 fell 0.44% vs. the third quarter. Says independent media analyst Richard Greenfield: 'We're not seeing the kind of dramatic growth we should given the surge in sales of iPods and other MP3 players.'"
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Apple Holding Back the Music Business?

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  • Silly (Score:5, Insightful)

    by lewp ( 95638 ) * on Tuesday December 13, 2005 @05:26PM (#14250485) Journal
    Oh no! Downloads are down less than 1% since the third quarter!

    Seriously, it's right before Christmas, as the article points out. Nobody's going nuts buying music because they're spending all their money on presents and other holiday shit. Apple says they're selling a crapload of gift cards, and I believe them, given that everything iPod seems to fly off the shelves, virtual or otherwise. Regardless, since you no longer have to buy the physical media songs come on, there's no reason to buy them when you're doing your normal Christmas shopping, so sales very well *should* be down.

    iPod sales are nuts, as usual, but that doesn't mean that music has to be selling, either. How many people you know, out of those who have bought iPods recently, are buying their first one? I'm sure a large portion of whatever iPods they're selling are peoples' second or third such devices. They're not going to be re-buying songs just because they got a new player, at least for now...

    All this amounts to is another chance for the music services that lost (and it was pretty much over before they even got started) to bash Apple in a futile attempt to gain some traction. It's pointless, though. There's no buzz about Napster or Rhapsody, it's all iPod, iPod, iPod, for better or worse.
  • Not that bad... (Score:5, Insightful)

    by rwven ( 663186 ) on Tuesday December 13, 2005 @05:27PM (#14250494)
    Well, 0.44% is not too much to whine about (less than half of one percent?) It could be that maybe a lot of popular *new* music didn't come out during that time compared to the quarter before.

    Not to mention a lot of the MP3 player sales they're basing their estimates on could have been bought as Christmas presents.

    I think they just WANTED a big growth in sales and things just don't always work out that way. They should compare things year to year, not quarter to quarter...

    That's my $0.02
  • by AltGrendel ( 175092 ) <ag-slashdot.exit0@us> on Tuesday December 13, 2005 @05:27PM (#14250496) Homepage
    I would suspect that people have enough of what they want to hear.

    For now.
    That's all.

  • 0.44%? (Score:1, Insightful)

    by SpcAgentOrange ( 936329 ) on Tuesday December 13, 2005 @05:28PM (#14250505)
    Is that like, less than 1/2 of 1 percent? Hell, that's a rounding error. Imagine that in the runup to [insert winter holiday of your choosing] people are buying less individual music, and more big-ticket items. K
  • Be my guest (Score:5, Insightful)

    by iamacat ( 583406 ) on Tuesday December 13, 2005 @05:28PM (#14250509)
    Critics say Apple's proprietary technology and its refusal to offer more ways to buy or to stray from its rigid 99 cents a song model is dampening legal sales of digital tunes.

    If music industry is considering non-propietory technology and prices below 99 cents/song, there is nothing Apple can do to prevent that. All they have to do is put their stuff on mp3tunes.com
  • Too Expensive (Score:5, Insightful)

    by EEBaum ( 520514 ) on Tuesday December 13, 2005 @05:28PM (#14250522) Homepage
    When downloads start costing significantly less online than on CDs (just like CDs should cost significantly less than CDs) people will buy quite a bit more.
  • They're GIFTS! (Score:5, Insightful)

    by cloudscout ( 104011 ) on Tuesday December 13, 2005 @05:29PM (#14250530) Homepage
    Yes, iPod sales are up, but those sales aren't going to transalte to iTMS purchases until AFTER the iPods have been opened. The story says that gift card sales are "off the charts". You can expect downloads to jump dramatically beginning December 24th.
  • by supabeast! ( 84658 ) on Tuesday December 13, 2005 @05:29PM (#14250531)
    "We're not seeing the kind of dramatic growth we should given the surge in sales of iPods and other MP3 players."

    Hmmm... sales suck on CD, sales suck online... maybe it's time for the record industry to reconsider its current business model of pushing albums where the musicians lose almost all control to producers who churn out an album with three good songs and ten filler tracks.
  • by ComputerSherpa ( 813913 ) on Tuesday December 13, 2005 @05:29PM (#14250539) Homepage
    Overanalyze much?
  • by op12 ( 830015 ) on Tuesday December 13, 2005 @05:30PM (#14250543) Homepage
    I use my own CD collection - NOT illegal downloads

    The article mentions this too....how does that hold back the music industry? They're still making money (and probably more per song than through Apple) on people buying CD's.
  • Not Apple's Fault! (Score:5, Insightful)

    by gasmonso ( 929871 ) on Tuesday December 13, 2005 @05:31PM (#14250555) Homepage

    Jobs wants to lower the cost of songs, but the RIAA has insisted that they raise the cost of new songs in order to lower the cost of other ones. Many people are not willing to pay $.99/song muchless $1.xx for one. And the complaint from Napster in that article is pathetic... they are just upset that Apple dominates the marketplace. You want more sales... then lower the price!

    http://religiousfreaks.com/ [religiousfreaks.com]
  • by mobiux ( 118006 ) on Tuesday December 13, 2005 @05:31PM (#14250557)
    Is 0.44% a statistically significant number?

    I.E. So of an average of 1,000,000 downloads, that means last month there were only 995600?

    Seems like someone is reading alot into it.
  • Yes (Score:2, Insightful)

    by Douglas Simmons ( 628988 ) on Tuesday December 13, 2005 @05:31PM (#14250558) Homepage
    I believe in the laisez-faire free market with exception to monopolies. In Apple's case, they have created one and good for them, but being at the top with tech stuff especially self-fulfills itself and the greater your marketshare, the more helium you have underneath to lift you further. Because that is due to the nature of consumers in whose minds a brand's importance is overstated instead of exclusively creating superior technology (which may be true but I said exclusive), it is ultra hard for other companies to compete. So, just as free markets get stiffled by government over-interference, Apple's throne is protecting them too much from the heat of competition that would otherwise pressure Apple to lower prices and or make even smaller nanos.
  • Lies! (Score:5, Insightful)

    by Darius Jedburgh ( 920018 ) on Tuesday December 13, 2005 @05:31PM (#14250559)
    Napster CEO: "but they're being restricted from buying anything other than downloads from Apple"
    Funny that seeing as (1) a large proportion of commercially available music can be downloaded from Apple and (2) iPods will play mp3 format files from any vendor or ripped from CDs. This guy is simply lying. It's interesting that someone can get away with such a bald-faced lie.
  • blame apple (Score:3, Insightful)

    by Paladin144 ( 676391 ) on Tuesday December 13, 2005 @05:31PM (#14250567) Homepage
    Yes, of course the music industry would love to blame Apple for anything that's been going wrong in their business. I'm sure it couldn't have anything to do with the big labels' dwindling music-producing skills. And lord knows it couldn't be that cool new bands are refusing to sign with major labels, and are deciding to go it alone against the RIAA, thus depriving the RIAA of the right to control their music and their future.
    </sarcasm>
  • by Golias ( 176380 ) on Tuesday December 13, 2005 @05:33PM (#14250587)
    This is a case of unreasonable expectations.

    When CD's came out, the vast majority of music lovers replaced the albums they already owned with new CD's.

    I seriously think that there are music execs out there who were hoping that a new format (downloaded music) would mean that we would all want to buy our entire music collections all over again, in spite of the fact that the power is in our own hands to convert files this time.

    Consequently, the back-catalog sales are absolute shit compared to what the early days of CD's were like. Lots of people are using iTMS to buy songs from Fountains of Wayne, Death Cab for Cutie, and/or the latest pop princesses, but nobody's re-buying the old Pink Floyd albums they already own in another format, and that's what's driving them nuts.

    Why, we even have the audacity to BACK UP our media files, so we no longer need to buy a new copy every few years because of loss, damage, or wear. It's KILLING their sales numbers.
  • by Ara ( 15000 ) on Tuesday December 13, 2005 @05:34PM (#14250595) Homepage
    Or, heaven forbid, there might be some people buying multiple iPods...

    For example, over the course of the product, I've owned 4 different iPods. Apparently this means that my online music buying should have quadrupled, which it did not.

    Thus, the link between iPod sales and buying music online is not directly proportional.
  • by kherr ( 602366 ) <kevin.puppethead@com> on Tuesday December 13, 2005 @05:34PM (#14250603) Homepage
    This is such a load of crap. It was RIAA who insisted on DRM before Apple could offer music. So Apple developed FairPlay to make RIAA happy, and thus was able to get all of the music we see in iTunes Music Store. This is whining because of the monster that was created. Apple owns the only really successful online music store. Apple owns the only portable music player that works with FairPlay. Music labels can easily get around this by dropping the need for DRM.

    This is exactly the lock-in future that DRM brings to the world. The music labels are crying bitter tears because they don't control the locks. Whaa whaa whaa. What would be different if Sony had succeeded instead of Apple? Do we think we'd be seeing Sony offering whatever they had to everyone? No. DRM simply sucks. It's anti-consumer, anti-competitive and restricts the growth of the marketplace. Reap what you've sown, you greedy bastards.
  • Confused? (Score:3, Insightful)

    by chill ( 34294 ) on Tuesday December 13, 2005 @05:34PM (#14250606) Journal
    I thought the iPod would play unrestricted MP3s? What is stopping anyone from buying an MP3 from Rhapsody, MP3.com, AllofMP3.com or anywhere else from putting them on their iPod? How is this holding back the *music* industry?

    I can see how it is holding back the portable music player industry, since they can't access iTunes, but they are direct competitors to Apple in the hardware arena. Apple made it easier to get to their service with their software, but that is the name of the game.

    [For the unenlightened, the rules DO change if you are a convicted monopolist [microsoft.com].]

      -Charles
  • It seems to me.... (Score:5, Insightful)

    by Big Boss ( 7354 ) on Tuesday December 13, 2005 @05:34PM (#14250611)
    That there is one very compelling reason NOT to buy legal downloads. DRM. No, not for the tinfoil hat reasons, but for one very simple one: interoperability. I can't take my DRMed iTunes AAC file and play it with my MP3-CD car radio. I can't play it via HMO on my TiVo. I can't play it in any other portable device. While I do own an iPod, I also own other devices that I listen to music on. Those can't play AAC, let alone DRM AAC. And I'm not even going to get into WMA-DRM.

    Burning it to CDA and re-ripping it doesn't count. It's annoying and drops all the metadata, in addition to the transcoding quality loss. If they want to sell me music, it MUST be in a non-DRM format that I can use on ALL of my devices, MP3 for example. If they refuse, I'll take my money/time elsewhere. Indy, filesharing, certain russian sites, etc.. And I'm sure I'm not the only one. I'd be happy to pay $1/song, for high-quality (LAME-Standard minimum) MP3 or FLAC audio files. Hell, let me pick the format and bitrate and charge me a little more for the bandwidth for the higher filesizes. Oh, wait, someone else allready does that.....
  • by ndansmith ( 582590 ) on Tuesday December 13, 2005 @05:37PM (#14250646)
    A competitor (I think it was Napster) put it well when they pointed out that using iTunes it would cost $10,000 to fill up a 10,000 song iPod. No one has ever expected the consumers to buy their music exclusively online. Apple debuted the iPod two years before the music store was online. They assumed that consumers would fill up their iPods with music extracted from their own CD collection and downloaded from P2P networks. Notice that there was not a significant price restructuring in the iPod line when the music store went live. In other words, the iPod is not a razor and the songs are not blades in Apple's business model, so dropping %.44 will probably not even make them balk.
  • 0.44%!? (Score:4, Insightful)

    by Turn-X Alphonse ( 789240 ) on Tuesday December 13, 2005 @05:40PM (#14250672) Journal
    0.44%!? That's less than 1%, hot damn the world's rebeling against music! That's like.. DOOMED!

    Totally ignore the fact that Christmas is comming up and people stop spending money on what they want and start saving for others, very often presents arn't music so the money goes else where.
  • Re:Silly (Score:5, Insightful)

    by yog ( 19073 ) on Tuesday December 13, 2005 @05:40PM (#14250673) Homepage Journal
    Agreed, this article is a little off the mark. Apple is a pioneer in this field and inevitable there are going to be some shifts as the industry adjusts itself. Certainly it makes more sense to sell some tunes for different prices, just as movies tend to sell for more at first and then end up in the discount bin when they're old hat.

    I think by demonstrating that it's possible to be a profitable "middle man" in the online music business, Apple has in fact saved the tushies of the music companies by offering an alternative to napster-like music trading systems. This exemplary system can be emulated by the music companies, if they so wish and assuming they have the intellect and vision, or they can go through Apple or Real or whoever else jumps in (Microsoft, probably).

    The iPod would not have succeeded if Apple had tied it strictly to their iTunes database and disallowed any other formats. The secret of success for any great product is its power to do one thing really well and flexibly, emphasis on the latter. They had to let people rip CDs to their iPods, and of course that will lead to trading and avoiding paying for tunes, but it also allowed the iPod to revolutionize the "walkman" generation's listening habits.

    Business Week is a pretty astute publication but this is clearly a case of short term-ism getting in the way of seeing what a revolutionary product the iPod really is--and now they're doing it again with videos. Should be interesting to see where they go with this. I think iPod may eventually absorb the cell phone and handheld organizer and we'll see excellent high capacity, wifi/cell-enabled personal bliss bars in everyone's shirt pocket in a few years.

  • by Anonymous Coward on Tuesday December 13, 2005 @05:41PM (#14250700)
    I am the same way and for a very practical reason: the quality (sound quality) of digital downloads is inferior to that of a CD. If Apple were to offer high quality downloads (using the Apple lossless format for example) I would start buying downloads even if the per song price were over $1. Maybe they could offer the "standard" 128k AAC files for $1 and the "audiophile" Apple Lossless files for $1.50 or even $2.00. For a lossy compressed format, ~200kbit VBR MP3 is the minimum I will accept. (I encode my own CDs using LAME preset standard and that seems to average out around 200k.)

    Also, they need to come up with a solution to the "segue" problem. Many albums are mixed such that one track segues smoothly into the next. You get this when you buy the CD. When you buy digital downloads you get hiccups (gaps) between the tracks. Kludges like a crossfade in the MP3 player are not acceptable. I want the exact segue as mixed on the original CD!

    There are two pieces to fixing this: the files themselves need tags indicating that a segue exists into the next track from the album and, for compressed audio formats, there needs to be a tag indicating any "gap" (coding delay or frame padding) at the beginning and end of the file such that the MP3 player can strip this off during playback. (The LAME encoder does this and so you get gapless playback on an enabled player eg Foobar2000.) The other item the tags should contain is a recommended fadein and fadeout to use when a track is not played among the other tracks of that album. That way you dont get abrupt cutoffs when playing songs in shuffle.

    Did I mention I still buy music on CD? Lots of it too!
  • Nothing old either (Score:5, Insightful)

    by kherr ( 602366 ) <kevin.puppethead@com> on Tuesday December 13, 2005 @05:41PM (#14250705) Homepage
    I bet I only find about 40% of the stuff I'm looking for on iTunes Music Store. I want to get a lot of music I grew up listening to but is not available on CD or online. Why don't these dimwit music labels put all of their back catalogs online? They sit on piles and piles of music that, if made available, would earn them money. Unlike pressing and shipping CDs, getting them online is a one-time cost that will easily be made up in sales.
  • Sorry RIAA... (Score:5, Insightful)

    by Craig Maloney ( 1104 ) * on Tuesday December 13, 2005 @05:41PM (#14250707) Homepage
    I'm sorry, but I've stopped purchasing RIAA encumbered music. There's plenty out there, and I don't need to support greedy corporations who don't understand their customer wants or needs. It only took a few years, but I finally caught that the RIAA is not interested in making sure that I remain a customer, and I've complied by taking my business elsewhere. Magnatune, Positron Records, Metropolis Records... they all get it. Soon other companies will understand that the problem isn't their customers (who want to support them), but the marginalized trade group cartels that are holding them back. Until this happens, my cash goes elsewhere.

    Sorry, RIAA... you had your chance.
  • and (Score:5, Insightful)

    by beforewisdom ( 729725 ) on Tuesday December 13, 2005 @05:41PM (#14250708)
    I'm sure draconian cd prices and lousy pop music have nothing to do with a decrease in sales.
  • Some, but not all (Score:3, Insightful)

    by jfengel ( 409917 ) on Tuesday December 13, 2005 @05:42PM (#14250723) Homepage Journal
    Some other services, but not all other services. In particular, you can't put on WMA-protected music, which is the next most popular format for legal music downloads after iTMS's own FairPlay/AAC format. (The article is something of a shill for Napster, which uses WMA).

    You can get lots and lots of music from other services in other formats supported by the iPod, especially MP3s, but usually those are from less-well-known bands or from services of dubious legality, like allofmp3.com.
  • Disposable Music (Score:2, Insightful)

    by Freaky Spook ( 811861 ) on Tuesday December 13, 2005 @05:43PM (#14250727)
    I get my music from AllOfMP3.com, I know its not the most legal business on the market but when I want music that good & works on any of my devices I can get it, even if i am only going to listen to it a few times.

    Music is like the new fast food, its junk for our brains & ears & people want a lot of it, I don't get how the music industry doesn't realise that & where the hell do they get their market research from.

    People want lots of music & they want it as cheaply as they can, when your competeing with a free market like the internet you can't try to restrict your competition you have to vigirously compete with it, even if your competition is illegal, its still competition.
  • by nelsonal ( 549144 ) on Tuesday December 13, 2005 @05:43PM (#14250730) Journal
    Business Week is the least capitalistic of all the business magazines. Their core reader is the useless MBA whose sole function is gumming up the works while collecting one more paycheck toward retirement. You can disagree with the Economist and WSJ but at a minimum they are anti-government intervention in all ways (good and bad for business). I generally find myself in agreement with the libertarian ethos of those, but can't stand the editorial bent of businessweek. Businessweek is pro corporate welfare but anti government intervention in anything that might hurt business.
    They are protectionistic, rearview focused, and generally useless for even lining a bird cage. The sole redeeming feature is that they are pretty good at calling the top of a mainia (by focusing on why you should be there now).
    It has always surprised me that the music companies blessed Apple's entry into music, when the most basic sales calculations were demonstrating that the iPod was the thing that legitimized the public use of shared music for a large subset of mainstream consumers.
  • Re:Too Expensive (Score:3, Insightful)

    by Nerdposeur ( 910128 ) on Tuesday December 13, 2005 @05:45PM (#14250760) Journal
    I heartily agree with that. Selling a CD off the shelf means manufacturing lots of them, printing booklets, shrink-wrapping, distributing to stores, suffering inevitable waste and theft, not always having the supply in the right place for the demand, etc etc.

    Digital sales are VERY efficient. Once something is recorded and set up, your only distribution cost is bandwidth. So why the heck does one CDs worth of material cost the same as one physical CD?

    For that matter, since a lot of the record company's work has been cut out, they should get a smaller cut of the profits than before, giving more to artists. Companies like CD Baby are doing nicely with this. Magnatune is another neat site; you can listen to streaming music all you like and you set your own price for the download (within limits).

    I don't agree with stealing music, but I do think that low prices are a good way for music sellers to win back some of the business that now goes to illegal downloads.
  • by Ucklak ( 755284 ) on Tuesday December 13, 2005 @05:46PM (#14250765)
    The article mentions this too....how does that hold back the music industry? They're still making money (and probably more per song than through Apple) on people buying CD's.

    Because those greedy bastards want a nickel EVERY TIME YOU HEAR THE SONG

  • by HangingChad ( 677530 ) on Tuesday December 13, 2005 @05:46PM (#14250771) Homepage
    But I'd still rather have a CD than download directly from iTunes. Then I can move my material from device to device as the media changes.

    It's mp3 this year but who knows what audio format is coming around next year? Are you going to be able to play your iTunes downloads 10 years from now?

    I'm glad Apple is doing well with iTunes, but it's just not for me. I want a disk. I want a disk I can rip to the PC and portable device of my choosing whether it's on Windows, OSX or Linux. And I especially want to be able to find something that can still play that CD 10 years from now.

  • right (Score:3, Insightful)

    by mr_tommy ( 619972 ) * <tgraham@@@gmail...com> on Tuesday December 13, 2005 @05:47PM (#14250779) Journal
    Forgive me - the main quote for the start of this story comes from Apple's direct competitor, Napster, and is followed up by more in-partiality by one from Real!? It doesn't take long to decide exactly how much credibility to give this piece...
  • Margin of Error? (Score:4, Insightful)

    by Elfboy ( 144703 ) on Tuesday December 13, 2005 @05:48PM (#14250784)
    .44%. Half of 1 percent. And what is their margin of error? Somehow I doubt Nielsen SoundScan has THAT high a precision.
  • Entitlements (Score:5, Insightful)

    by Anarcho-Goth ( 701004 ) * on Tuesday December 13, 2005 @05:48PM (#14250791) Homepage Journal
    Simply put, record company execs are looking for entitlements.

    Ultimately, they think they are intitled to make a profit every time someone listens to a song under their umbrella, or iron fist.

    So if I own a lot of LP records, and want to listen to them in the car (car turntables are not very stable unless you drive really carefully) they cry "No Fair!" and get a tax put on casset tapes.

    If this were really about piracy, that would be the only thing they would mention. The fact that they are complaining about people filling up their iPods with music that they already have a legal right to tells us what is really on their mind. They feel entitled for people to buy music all over again. And in another 10-20 years they will propose yet another format and expect it over again. Like a corrupt utility company, or a corrupt government, record companies want the right to tax us and then keep that money for themselves.

    With any luck Artists will control their own music, and profit from it by then and the record companies will be dead.
  • Timeline (Score:2, Insightful)

    by atomic_toaster ( 840941 ) on Tuesday December 13, 2005 @05:52PM (#14250844)
    My theory is that the timeline for purchasing an iPod & using iTunes goes something like this:

    1) Buy iPod.
    2) Rip CDs purchased way back when.
    3) Buy music at iTunes to fill in the gaps in music collection.
    4) Load everything on the iPod.

    Now, everyone will have their own personalized timeline; you may already have ripped your CD music collection, or bought/downloaded mp3's from somewhere else, who knows? My main point here is that, for most people, buying an iPod is the first step, and buying music from iTunes (if they're going to do it at all) will come somewhere later, right?

    Now, take into account that it is right before Christmas. People are buying iPods like mad (I know that in my city it's bloody impossible to find a 4GB Nano anywhere), and possibly iTunes gift certificates with them. Yet these iPods won't actually be opened until Christmas, and then people still have to install them and all that jazz (which, for the more technically savvy, is a piece of cake, but there are a lot of people out there who will have to wait for help from the family geek to get their iPod up and going). So the ratio of iPods sold over the last little while to people buying music from iTunes is of course going to be a little wonky.

    Go ahead, iPod customers, prove my theory wrong. But I'd be curious to see what the rate of downloads is between Christmas and, say, the end of January. I'd predict that they'll be higher than the monthly average over the past year.
  • Re:Not that bad... (Score:5, Insightful)

    by slashname3 ( 739398 ) on Tuesday December 13, 2005 @05:56PM (#14250880)
    You hit the major points in your post. It is the Christmas season and a few people are spending on other things than music or are to busy to buy more music. And a good percentage of those iPod purchases are probably Christmas gifts (or should I say Holiday gifts, is the word Christmas allowed anymore?).

    This smacks of another jab from the music industry trying to cry about how they are all going to go out of business because people can download songs for a dollar. The sad part is some congress critter out there that gets huge amounts of money under the table from the recording industry will use this to launch some legislation that will impose unrealistic and unenforcable laws on everyone.
  • by Prospero's Grue ( 876407 ) on Tuesday December 13, 2005 @05:56PM (#14250891)
    I seriously think that there are music execs out there who were hoping that a new format (downloaded music) would mean that we would all want to buy our entire music collections all over again, in spite of the fact that the power is in our own hands to convert files this time.

    The music industry insists that we all should buy our music collections all over again. It's legal to copy the CDs for your own use - just as it's legal to copy DVDs for your own use.

    That's why the laws to make it illegal to break encryption - it was a way around consumer rights. You can rip DVDs for your own use, but you can't break encryption, and the movies are encrypted.

    This nonsense of attempting to DRM CDs is just the music industry trying to play catch-up. Trust me, I've ripped my 200+ CD collection, and the music industry would have me pay for every single song a second time.

  • by ivan256 ( 17499 ) * on Tuesday December 13, 2005 @06:07PM (#14251017)
    He's still got a point.

    No he doesn't.

    He's implying that without Apple, the music industry would have some great online business going and be selling tons more music. That's clearly bullshit. If it were true, they would have their thing going dispite Apple, and people would be using it.

    The music industry is pissed because Apple came up with a device that everybody wants, and instead of using it to make zillions of dollars for the music industry, they're using it to make zillions of dollars for themselves.

    Boo hoo.

    Apple doesn't owe the music industry *anything*. If the iTunes music store didn't exist, people would *still* buy iPods like crazy, because it's the only player out there that is user friendly, stylish, and completely impartail to whether you choose to listen to licensed or DRM-free content. It seems to me that iTunes is just a big shield from lawsuits, because as long as it exists there are considerable and obvious non-infringing uses for Apple's device. iTMS is Apple covering their ass. If this Napster guy wants more control, then he should come up with a device that people like better than an iPod and tie it to his service instead. He won't though, because he can't build a device that allows people to play pirated music, and consumers are fed up with paying high prices for music.

    Apple isn't holding the music industry back, consumers are. They've reached the limit of how much money they're willing to fork over. They're going to have to be sitisfied with their revenue pit just being bottomless, and learn to live with the fact that they can't keep making it wider too.
  • by Peter Trepan ( 572016 ) on Tuesday December 13, 2005 @06:07PM (#14251022)
    Yeah, that's what I thought.

    I know dozens of talented musicians in active local bands, but I don't know anyone - not even a friend of a friend - who makes a living from their band.

    The solution? Let go of those cherished dreams about getting "discovered" and give your music to the world for free. If you don't like the record industry, that's the best way to screw them. Do it for the recognition. Do it for the chicks. Do it because you enjoy it. But if you're doing it for the money, you'd be better off buying lottery tickets.
  • by patomuerto ( 90966 ) on Tuesday December 13, 2005 @06:09PM (#14251044)
    First a drop of 0.44% is not something to stop the presses about. It might be the beginging of a trend but I would be suprised if it is outside of any statistical error.

    Second, they do not give any information of mp3 purchases and usage. I just bought a nano because of its size. I am not getting rid of my 40GB ipod because of its storage capacity and I still have the first ipod player I bought years ago (TDK mojo) that I keep around just in case (for what I dont know). Most of my friends have upgraded players as well and intend to keep their original. They are not going to repurchase music.

    Third, in all the music sales itunes only makes up 4% [com.com] of music sales. They do not mention if CD proces are driving people to pirate music. Personally, I would rather own a CD but I cannot justify $15. Especially if I am only buying it for a few songs. I stopped file shareing music a while ago but I do understand why some people continue.

    Why didnt the author point out that CD prices rarely come down. Sometime a title will show up in a bargin bin but a customer cannot consistently wait for the price to come down. More that often the case is the price is reduced when it comes out and then you can only pay regular after a few months (which can be $18 or more).

    Also, why didnt the author point out the pricing of music is almost a mystery for all media. Try to find out how music execs plan to price a cd for its lifetime, how much are production costs and who gets the proceeds at various stages over time (please, try--I would love to know). It is not public knowledge for a reason.

    My impression it this guy is either grossly uninformed or a shill.
  • by Jtheletter ( 686279 ) on Tuesday December 13, 2005 @06:15PM (#14251105)
    Thus, the link between iPod sales and buying music online is not directly proportional.

    Indeed, and besides people buying multiple ipods I think the reason they're seeing a huge increase in ipod sales but not in music sales currently is because most of the ipods selling right now are probably Christmas/Chanukah gifts. Hence hardware sales now, music sales LATER.

    Expecting music sales to increase directly with ipod sales is like expecting people to buy a year's worth of gas at the same time they buy a new car.

    And since when has a decrease of less than one half of one percent as compared to a previous quarter meant a product/business model was failing, or that piracy is somehow to blame? I mean we all know no one else has anything more important to buy than music - certainly not higher gas prices, higher home heating prices, a huge portion of Louisiana residents just looking for jobs/homes, and one of the most intense years for charity in recent history (Katrina & FL at home, tsunami and massive earthquake abroad).

    Good god music industry, get your heads out of your asses and just fix the numbers in the direction you want like you always do. Of course, online music sales being down won't stop them from continuing to insist iTunes songs should cost MORE.

  • by MoneyT ( 548795 ) on Tuesday December 13, 2005 @06:16PM (#14251117) Journal
    Where is the lock in? I don't see it in either example. The lock in is present only in the file format, not the player itself. With MP3 formated files, I can move from any one player to any other player. Buying an iPod does not force me to buy from iTMS. Likewise, buying a Microsoft player does not lock me into WMA files.
  • by cmholm ( 69081 ) <cmholmNO@SPAMmauiholm.org> on Tuesday December 13, 2005 @06:16PM (#14251122) Homepage Journal
    Apple does enjoy its little lock-in scheme that we love to roast Microsoft for.

    Yes, a little lock-in scheme. They sell a music player, throw in an on-line service as a sales gimmick. Consumers have alternatives to an iPod, and music distributers have alternatives to iTunes. For some bizzarre reason, consumers opted for the Pod enmass. Go figure.

    Naturally, "Napster" is pissed. It may be that they'll stay pissed. Every seller's favorate business model is subscription, for the continuing income stream. A consumer's favorate model is (usually) to buy something once, so that they don't piss away money on goods and services they aren't always using. Most folks are already Washington and Franklin'ed to death by rent/mortgage, insurance, utilitities, cable, phone, cell phone, isp, and transportation. And now some bozos want to add music to our monthly.

    Yeah, I'll get right on board with that. Sorry Chris, I already did a snail mail version of Napster with the Columbia Frickin' Music Club back in the day. A pain in the ass, having to turn back the crap they were pushing, once you had your fill of your favorates, and got down to the long haul of sorting out a few grains of one's personal wheat from the chaff.

  • by DarkBlackFox ( 643814 ) on Tuesday December 13, 2005 @06:24PM (#14251190)
    I think the GP's post was meant to show there wasn't a lock-in. Insert whatever company you want into that statement, and it only drives the point home.

    As long as the device can play any other [more open] format than the proprietary downloads, it's not a lock-in. In this case, the iPod can also play MP3s- it's not locked into Apple's format. If the iPod played only AAC, and not MP3s, it would be a lock-in. Just like it would be a lock-in if any Microsoft MP3 player only played WMAs.

    If the choice is there regardless of brand, the lock-in argument becomes invalid. Whether or not any businesses choose to use the format is irrelevant- it's a publicly accepted format in very widespread use.
  • Re:XMas? (Score:3, Insightful)

    by shawb ( 16347 ) on Tuesday December 13, 2005 @06:26PM (#14251203)
    This article is a non-issue for several reasons:

    1)As you say, many of the iPod purchases are gifts which have not been opened yet.
    2)Many of the iPod sales are to repeat customers who do not have to fill up their library again. I am sure a significant number of the people who are getting their first iPod also already have music purchased from the iTunes store.
    3)There are more outlets to purchase music online now than there were before, so iTunes sales would suffer due to the competition. That's only natural.
    4)The previous quarter was the beginning of the school year. I imagine many students would get new music at the beginning of the semester. They are too busy with papers and studying towards the end to shop around for music. And they are getting too tight on funds as student loans or summer job savings have been spent already.
    5)Because the holidays are coming up, people are less likely to buy music for themselves, but they have been purchasing iTunes gift cards [apple.com] of which a significant portion will be redeemed shortly after christmas. I'm guessing this alone would account for at least 0.44% of last quarter's sales. I mean, it's not like you'd actually purchase music from the iTunes store to put it on someone elses iPod as a present... you'd just give them a gift certificate to do it themselves. Similar to 1) but not entirely the same. For instance they would probably be inside a card than have a card taped onto them.
  • Dear Chris (Score:5, Insightful)

    by Tsiangkun ( 746511 ) on Tuesday December 13, 2005 @06:37PM (#14251306) Homepage
    Chris Gorog, CEO of Napster Inc. (NAPS ), which sells both subscriptions and downloads. "You have this device consumers love, but they're being restricted from buying anything other than downloads from Apple. People are bored with that."

    Chris,

    I know this is hard to wrap your head around. The iPod is a media player with a built in hard drive. There is no vendor lock in. I've been able to downlaod music from napster, kazaa, soundclick, and a variety of vendors. Amazingly, they all work fine. AIFF, WAV, MP3, ACC, all work fine on my iPod. Should your's behave differently, RTFM.

    What the iPod doesn't do, is support every god damned DRM scheme on the planet that lets you and your corporate cronies "lease" your DRM infected music to iPod owners. Quite frankly I'm not interested in DRM laden crap from napster, real, or anyone else including iTMS. I bought my iPod to carry around the large collection of music I already have, not to populate it with new music that has been approved by some industry suit.

    So, in conclusion, the iPod is a hard drive. I can get files of any type onto it with ease. The iPod is a media player. I can play a fair variety of widely available media types without problems. The problem is in the DRM schemes that lock content to specific devices.

    The iPod did not lock me into anything, your DRM infected business plan locked me out of your customer base. I am not interested, and it has nothing to do with my iPod.

    I have not, nor will I ever "lease" digital music for my device. If I am paying with real cash, I want real bits I can twiddle as I see fit.
  • by ivan256 ( 17499 ) * on Tuesday December 13, 2005 @06:43PM (#14251365)
    Wrong. He's implying that Apple has created a device that Apple can sell music for.

    How does that make me wrong? Can't he imply more than one thing in an article?

    I fail to see how anything Apple does makes it OK for anybody else to bitch that they're not making money off of it. If you want a piece of the action, it's not Apple's job to open the door for you. In fact it's their job to keep it shut and protect their profits. It's rediculous for anybody in the music industry, or any other business, to expect Apple to do them any favors.

    Who cares if other businesses aren't permitted to offer alternative services?

    If you want to make money in the digital music market, you need to do it yourself. Why should Apple help you to make money off their product?

    If this guy is so smart, he should make a better store and a better player. If he's right, it should be possible, and people should flock to it and leave the iPod behind. Anything he can come up with that nets the recording distribution industry more profits is pretty much guarantreeed to be seen as *worse* by consumers though, so he'll never pull it off. He doesn't want to offer you choice, he wants Apple to stop being so damned nice (in his opinion; obviouly not in your opinion) to consumers because it's preventing them from getting away with charging more (where more is most likely a pay-per-listen or some other recurring revenue model).

    We love Apple, the iPod, and iTunes. Who cares...

    I don't understand why you assume that any opinion of Apple or their products has anything to do with my point. I'm talking business here, I'm not being some fanboy. I don't have to like or dislike Apple's practices for me to see why it makes sense for them to do that stuff interms of their bottom line. The goal is to make money, not to win a popularity contest.
  • by DeliBoy ( 789412 ) on Tuesday December 13, 2005 @06:47PM (#14251393)
    "I have half a million subscribers who would love to use an iPod with my service," says Napster's Gorog.

    I'll bet a lot of owners have used Napster (circa 1998) to load their iPods. About 20% of the music in my collection is from this previous version of Napster. Most of that is crappy 128k, misnamed, and ID3tag-less. 60% of the rest of it is from legally ripped CDs. The final 20% is legitimate free music - from archive.org, fingertips, The Hype Machine, other blogs, live torrents, etc.

    Perhaps the RIAA should reconsider the free ride they expected from iPod users. When I purchased my Nano, the sole purpose was to haul around some of the 120GB of music I own. I never planned on using Apple's Music Store, and I probably never will. Similarly, I will never purchase DRM encrusted music. The music industry should really consider anything they've sold through iTunes as frosting.

    And while we're on it, the RIAA will never see me re-purchasing music I already bought. I've downloaded and feel fully entitled to albums I've previously bought on cassette & LP. I could go through the work of encoding it in realtime, but the same thing is available online for free. The same goes for lost or damaged CDs. I've been emailing the RIAA regularly for several years to see if they have a problem with this policy - with no reply to date.

    "You have this device consumers love, but they're being restricted from buying anything other than downloads from Apple."
    - Is Gorog willfully ignorant of free music, or just plain stupid? Has he ever even used an iPod?

  • Should (Score:2, Insightful)

    by umbrellasd ( 876984 ) on Tuesday December 13, 2005 @06:56PM (#14251484)
    "Music sales aren't what they should be." There is no should in the market. There is what is. It is just retarded when things do not meet some "smart guy's" expectation and then the guy claims the market is wrong and he is right about what should be happening. It's about as unscientific as you can get. At this point all there is is a correlation between iPod sales and reduced music sales, and an extremely weak correlation at that. There are a wealth of other economic factors involved in music sales and few of them are constant right now.

    That's a far cry from cause, and some guy's expectation is a far cry from proof.

  • Re:My theory... (Score:5, Insightful)

    by Okonomiyaki ( 662220 ) on Tuesday December 13, 2005 @06:58PM (#14251499) Homepage
    ...is that starting around the end of November, a lot of people who bought iPods just took them home and wrapped them in colorful paper instead of opening them and loading them with music. Wait.
  • Re:What? (Score:3, Insightful)

    by necrognome ( 236545 ) on Tuesday December 13, 2005 @07:06PM (#14251568) Homepage
    I'll back down if you can name one or two.
    bleep.com [bleep.com].
  • by SeaFox ( 739806 ) on Tuesday December 13, 2005 @07:08PM (#14251591)
    You think the Record labels would really complain if people were to "mostly fill up their players from their own CD collections.

    Yes. Because they'd rather have me buy two copies of each song I want to listen to.
  • Re:Lies! (Score:5, Insightful)

    by The Amazing Fish Boy ( 863897 ) on Tuesday December 13, 2005 @07:08PM (#14251594) Homepage Journal
    I'm a customer of Rhapsody. I can't use my subscription service with an iPod.

    So you bought music knowing it had DRM, and knowing iPod doesn't play it, and now you're complaining. Sounds like you fucked up.
  • Re:What? (Score:4, Insightful)

    by MoneyT ( 548795 ) on Tuesday December 13, 2005 @07:10PM (#14251613) Journal
    Nobody will sell those MP3 files on-line. So you have to jump through extra hoops to get to them. I'm sorry, but I'm not accepting MP3 as a non-lock-in example.

    "Buying an iPod does not force me to buy from iTMS."

    Okay, maybe I'm being ignorant here. What other services can you buy iPod compatible music for? I'm dead serious, I'll back down if you can name one or two. Part of my reaction here is that I CAN'T use my existing music service with an iPod, but with other players I can. You'd be doing me a huge favor if you could suggest an alternative music service with a subscription model that I could use an iPod with.


    Failure to fill a market void is not lock in. Your subscription services failure to offer iPod compatible music is not lock in. You are the one that chose a subscription service which locks you out of using the iPod.
  • by meringuoid ( 568297 ) on Tuesday December 13, 2005 @07:23PM (#14251735)
    Perhaps "lock out" would be a better description then. iPod owners are effectively locked out of competing services (Yahoo, Rhapsody, Napster).

    Well, so what?

    iPod users can't download music from Yahoo! or Rhapsody or Napster because of the incompatible format those services have chosen to use. Personally I think that's a strange business decision - denying yourself, what, 95% of the potential market? - but I suppose that's their choice.

    Wait, what's that? The record companies insisted they use DRM? They couldn't just offer mp3s for download, which would have played on absolutely anything? Well, isn't that the record companies' fault, then?

    It's terribly strange that the recording industry and the non-iTunes download services blame Apple for the consequences of their own policies.

    Personally, I have no truck with any of them. I have an iRiver iHP-140, which won't play any DRM'd files as far as I'm aware. I have no problem with this... I put shiny discs into my computer and press 'rip', producing files of whatever bitrate I desire. I hardly feel locked out of anything as a result.

  • Re:Not that bad... (Score:1, Insightful)

    by Anonymous Coward on Tuesday December 13, 2005 @07:25PM (#14251756)
    The sad part is some congress critter out there that gets huge amounts of money under the table from the recording industry will use this to launch some legislation that will impose unrealistic and unenforcable laws on everyone.

    Two things: First, that cash isn't "under the table", it's a "campaign contribution"; second, the legislation being launched by the congress critter was written by the industry in the first place. Can't buy a better law than one you wrote yourself.

  • by forgoil ( 104808 ) on Tuesday December 13, 2005 @07:28PM (#14251794) Homepage
    Preferably at all other times as well. When are they going to realise that the single biggest reason why people aren't spending more money on music is the fact that a handful of music stars and music industry bosses already have taken all the money. People just don't want to spend that kind of money on music anymore, and why should they? It has never been cheaper to copy music, and in fact, that is what people are doing. They are willing to pay the hardware price, but no longer the software price.
  • Ignorance is bliss (Score:3, Insightful)

    by geekee ( 591277 ) on Tuesday December 13, 2005 @07:45PM (#14251917)
    "With any luck Artists will control their own music, and profit from it by then and the record companies will be dead."

    If ignorance is bliss, you must be very happy every time you contemplate the music industry, or economics or business in general.
  • Seriously. (Score:5, Insightful)

    by commodoresloat ( 172735 ) on Tuesday December 13, 2005 @07:57PM (#14252003)
    This reminds me of the "Apple is dying" hogwash. iTMS sales are down a bit so now Apple is holding back the music industry? Give me a break. It if wasn't for iTMS, the music industry's main mode of doing business with the internet would be the same as it was in 1998-9 -- suing the hell out of Napster, Gnutella, etc. users, and extorting money from anyone forward-thinking enough to invest in such endeavors. Apple came along and showed the industry that there was a way to make money selling legal downloads, and now they are bitching that it's not enough. They want the price raised; they want more DRM; they want more restrictions and more costs added until we are paying full album sticker price every time we listen to a song, and they're still complaining that sales are going down. Even then it won't be enough for these greedy corrupt egotistical blowhards. Given their attitude they should be happy anyone buys any music from them at all.
  • by Anonymous Coward on Tuesday December 13, 2005 @08:38PM (#14252263)
    You'll spend $2/track for lossless encodings? I'd pay $1 for lossless encoding, since then I'm obtaining a similar value between the typical CD and purchasing online. I won't, however, pay twice as much for a CD to obtain lossless encodings.
  • by soft_guy ( 534437 ) on Tuesday December 13, 2005 @09:07PM (#14252462)
    In your case, it sounds like you've "outgrown" buying more music. You aren't into new artists or looking forward to new records coming out.

    To get my 70+ year old father to buy more music, you'd have to bring Bob Wills back from the dead to record another album.

    I don't think you or my father are the kind of customer the RIAA is trying to attract.
  • Re:Incorrect (Score:2, Insightful)

    by Loconut1389 ( 455297 ) on Tuesday December 13, 2005 @09:50PM (#14252681)
    It's another sign that everyone is going out of business.
    Remember the dot com implosion?
    "Everything's overinflated, no real assets." "Everything's overinflated, no real assets." "Everything's overinflated, no real assets." The talking heads repeat over and over...
    Finally, a downturn and everyone panics, "oh my gosh, everything was overinflated, this stuff isn't worth anything!"

    If you broadcast "impending failure" loud enough and long enough, a failure will occur where one may not have otherwise.
  • by badasscat ( 563442 ) <basscadet75@@@yahoo...com> on Wednesday December 14, 2005 @12:22AM (#14253356)
    I don't think you or my father are the kind of customer the RIAA is trying to attract.

    No? I'm not the guy who wrote the comment you're replying to, but I'm in the same boat. You really think the RIAA doesn't want to attract thirtysomething males with scads of disposable income? Maybe you're right - maybe they don't care about actually getting people who have money to spend, but that's really their problem, isn't it? Shouldn't they be doing something to attract people like me?

    I actually do still buy music, but of the last six CD's I've bought, five have been used CD's from Japan. If I told the RIAA this, it would drive them absolutely nuts. They'd tell me I'm everything that's wrong with music consumers these days - buying used, and buying imports! This is what they need DRM and region protections for! And pass a few more laws too while you're at it, make used purchases illegal!

    Well you know what? Release those CD's in the US, and provided there was no DRM on them, I'd have bought them new. But hey, RIAA, you didn't. So I had to take matters into my own hands, didn't I?

    I have no patience for Britney Spears or JessicAshley Simpson or any of these tone-deaf, generic monkeys from American Idol that they keep trying to foist on the American public. So yeah, maybe they're not trying to attract me; instead they're trying to attract people without any taste that live in trailers and live off unemployment insurance. Well, more power to them I guess, but that doesn't sound like a business model.

    I guess the point I'm trying to make is yeah, I've slowed down buying music as I get older, but it's only because the RIAA and its member companies (and the RIAA is the music labels, remember) refuse to release any music I'm interested in anymore.
  • Re:No (Score:3, Insightful)

    by el_womble ( 779715 ) on Wednesday December 14, 2005 @06:39AM (#14254829) Homepage
    It worked then. You would have infringed copyright had iTunes allowed you to share. They allow a work around that is both time consuming and annoying, but not difficult, and you refuse to break copyright. Sounds like pretty succesful system.

    When it comes to DRM - don't make it hard, people like a challenge, make it boring.

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