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iTunes Sales 'Collapsing' 651

Posted by ScuttleMonkey
from the nothing-definitive dept.
Alien54 writes to tell us The Register is reporting that based on reported revenues this year iTunes sales are plummetting. From the article: "Secretive Apple doesn't break out revenues from iTunes, but Forrester conducted an analysis of credit card transactions over a 27-month period. And this year's numbers aren't good. While the iTunes service saw healthy growth for much of the period, since January the monthly revenue has fallen by 65 per cent, with the average transaction size falling 17 per cent. The previous spring's rebound wasn't repeated this year."
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iTunes Sales 'Collapsing'

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  • by linuxbaby (124641) * on Tuesday December 12, 2006 @03:21AM (#17204860)
    Here in the land of the truly independent artists [cdbaby.net], iTunes sales have almost DOUBLED. iTunes is paying our clients almost a million dollars a MONTH in sales, now. (My company is one of the back-end digital distributors of audio to iTunes, Rhapsody, EMusic, etc.)

    I feel like this is the same story as "CD sales are declining!" The whole time you've heard that in the news for the past 6 years, physical CD sales for small independent artists has shot WAY up.

    It's like you were looking at one of those stock charts that compares two different companies' stocks. The big famous artists would be that stock whose value has fallen from $100/share to $70/share. But the independent (mostly unknown) artists are like a $1 stock that is now at $5. It's more newsworthy to talk about the big visible stock falling, but the real story down here is in the huge boost that the indies have gotten from improved distribution / availability.

    Check out this visual / geographic metaphor [longtail.com], too.

  • by ZP-Blight (827688) on Tuesday December 12, 2006 @03:49AM (#17204988) Homepage
    When there was only the iPod as a really good portable player, iTunes was the only game in town. Now when you can get decent quality alternatives, interoperability is becoming a much bigger issue and DRM is like a doorstop not letting anyone in.

    And when people can't get into a particular venue, they'll look elsewhere. And science bless the internet, there's a lot to choose from these days.
  • I use a gift card (Score:5, Interesting)

    by Derling Whirvish (636322) on Tuesday December 12, 2006 @03:51AM (#17205000) Journal
    I use a gift card. Is that tracked like the credit card sales?
  • by popo (107611) on Tuesday December 12, 2006 @03:54AM (#17205020) Homepage

    Other industries improve their products over time. Where's the product improvement here?
    Last time I checked Apple was still trying to sell DRM'd low-fidelity 128-bit MP3's.
    Ultimately iTunes is a store for ignorant music shoppers who don't know that the music
    they're buying is crippled and sounds significantly worse than a CD. When the public
    becomes more discerning, its typically time to improve your products. Hello? Apple?
  • hohoho (Score:5, Interesting)

    by djupedal (584558) on Tuesday December 12, 2006 @03:59AM (#17205050)
    Must be a slow news day in the UK, I guess...

    By reading that article (burn job de' jour), and most of the comments here so far, you'd think iTMS only sells music. Man - talk about tunnel vision.

    ...it doesn't. Movies, TV shows etc . are also part of the menu, so much so, that some are wondering how much longer Apple can call it the 'iT Music Store'.

    Ok, so for the sake of whatever, we'll ignore the other digital fares for a moment, and talk about music sales out of the iTMS. Check the calendar...what, a dozen days from now and Santa will do his fear-factored chimney drop, right? All those USD$79.00 2G iPod Shuffles that are being stuffed into stockings as we speak, along with untold tens of thousands of other iPods & iMacs, are going to come online all at once. The bounce for the iTMS will not be trivial, in any case, easily echoing well into 2007 - perhaps just in time for the iTV, iPhone & wIdescreen iPod to hit the shelves and then...bamn...another bounce.

    Collapsing - give me a break. The only thing collapsing is the patience of Apple's shell-shocked competitors, as they try to endure being dragged around the town square behind a team of slathering wild horses...again.
  • by moriya (195881) on Tuesday December 12, 2006 @04:08AM (#17205092) Homepage
    I think there's more to the declining sale than just a release of iTunes 7.0. I'm no expert on how things are going but it seems Apple is expanding a bit too much as to what they offer in the online store. First, we had just plain ol' music. And that's fine given the iPod can only play music. Then it expanded to photos and then videos. Soon the store offered some music videos... then TV episodes... and now movies...

    Maybe it's because of other things... but my feeling and opinion is that Apple should have stuck with music overall instead of expanding into selling music videos, TV shows, and movies.
  • Re:The Register (Score:5, Interesting)

    by Jah-Wren Ryel (80510) on Tuesday December 12, 2006 @04:12AM (#17205114)
    The Register is not exactly a trustworthy news source. Think of it as the supermarket tabloid of Technology News.

    The Register and the Inquirer (founded by the creator of the Register after losing a power struggle at the Register) never sign NDAs. That means that they rarely get the inside scoop. But, it leaves them completely free to report whatever they dig up, whenever they dig it up.

    So, you have your choice - Press Release journalism from places like Anandtech, Tom's Hardware, etc or "You'll know it as soon as we know it" from places like The Reg and The Inq.

    Pick your poison. I choose the later - better to get it wrong by accident than by some PR flack's direction.
  • *revenues* not sales (Score:1, Interesting)

    by Anonymous Coward on Tuesday December 12, 2006 @04:38AM (#17205222)
    if you read the article, it sounds like there is a greater percentage of lower-margin sales happening (tracks) now vs. higher margin stuff (albums).

    sales could be up, even if revenues are flattening.
  • by DECS (891519) on Tuesday December 12, 2006 @04:41AM (#17205230) Homepage Journal
    The fantasy of iTunes lock in is rather weak. Anyone downloading iTS music is unlikely to be freaked out by some hypothetical loss in quality from buring to a CD and reimporting it. It wasn't high end audiophile stuff to begin with, so anyone who could hear the difference woundn't be experiencing the problem.

    Vendor lock in is not Apple's plan, its the fantasy of people trying to vilify Apple for selling a good product. There is minimal profits with selling RIAA music, since Apple only gets a few cents anyway. The real money is going to the RIAA, or in the case of iTS indies like CDBaby, the artists. The value Apple adds is the service and convenience, and that makes its overall system of iTunes and the iPod more attractive. That's why iTunes doesn't work with other music players, and that's where Apple makes its money: the iPod hardware.

    Microsoft thought the money was in downloads, so it set up PlaysForSure to inject itself into stores and players to make tax money on every song moving around. Unfortunately for them, there was no volume of songs being sold. The new Zube is hoping to make money on hardware sales, but because its priced to compete with the iPod, its not making any money either. And subscriptions aren't going to result in anything either - Microsoft bet the farm on music rentals, and consumers are clearly even less interested in signing up for music rentals that they are about buying tracks online.

    No amount of analysis studing the buying habits of 7000 people, less than half of whom even use the iTS, will tell you much about how well the iTunes store is doing. Apple's own numbers make it clear that everyone with an iPod isn't buying music. In fact only a minority are both willing and able, since the store doesn't sell music worldwide.

    Apple is building a platform based on hardware profits, the same thing it has always done. Microsoft is trying to tax a system with licensing fees. The difference is that in this arena, Microsoft doesn't have cheaper, higher volume hardware sales to ride. It's trying to ride a minority of the market: a fraction of the installed base, made up of less profitable hardware. It has further splintered its efforts by breaking the Zube off from PlayedForSure.

    The other missing component between the PC business and the music player business is that music players don't need specialized software, they can run the same music users already have. So Microsoft is also lacking an equivalent to Office to sell its music customers. This is not another Windows.

    Why Microsoft Can't Compete With iTunes [roughlydrafted.com]

    Newton Lessons for Apple's New Platform [roughlydrafted.com]
  • by Mr2001 (90979) on Tuesday December 12, 2006 @05:32AM (#17205438) Homepage Journal

    The fantasy of iTunes lock in is rather weak. Anyone downloading iTS music is unlikely to be freaked out by some hypothetical loss in quality from buring to a CD and reimporting it.
    No, but they might figure that the inconvenience of having to jump through those hoops just to listen to the music they've paid for is a reason to stay away from the iPod+iTMS system.

    That is, if you buy an iPod, buy a bunch of DRM'd music for it, and then decide next year that you like another player better, you can look forward to hours of burning and re-ripping. If you buy a PlaysForSure device, however, then there's at least some chance that the player you like better next year will also be a PFS device, and your music will be portable. And if you're a think-about-the-long-term kind of guy, those possibilities might influence your buying decisions this year.

    Vendor lock in is not Apple's plan, its the fantasy of people trying to vilify Apple for selling a good product. [...] Apple is building a platform based on hardware profits, the same thing it has always done.
    You're arguing against your own point here. Apple wants to sell hardware, so it isn't exactly far-fetched that they'd bind their software (music files) to their hardware on purpose - that way anyone who buys the software has an incentive not to jump to another brand of hardware. You can see the same principle at work with OS X requiring Apple brand hardware.

    BTW, the name of Microsoft's new player is "Zune".
  • by Anonymous Coward on Tuesday December 12, 2006 @05:49AM (#17205536)
    Maybe it's because of other things... but my feeling and opinion is that Apple should have stuck with music overall instead of expanding into selling music videos, TV shows, and movies.

    Unless that was the plan all along. Apple makes little to no profit from music, music is a fickle industry and the labels had to be brought to the table kicking and screaming. They did not want online distribution. it was forced upon them. It's almost 2007 now.. What, eight or nine years past Napster's heydey... And they still seem to wish downloadable music would just go away. To them, the iTunes store is a "strange bedfellow", and to Apple, the store is nothing more than a way to sell iPods.

    The TV and movie industry, on the other hand, seems to want to find a way to distribute online. Apple wants to be the one to do it. I would bet that the arrangement here is much more in Apple's favor and that, unlike music, Apple makes a profit from every TV show and movie sold.

    Of course there are valid reasons for each of their positions-- the simplest being the music industry profits from CDs before anything else, whereas a TV show or movie has generally paid for itself already through commercials or the box office.

    So what I'm saying is... Could it be that the iTunes music store was just a stepping stone to what Apple really wanted, which is to deliver TV and movies over broadband to the living room?

  • Re:Why buy the cow? (Score:5, Interesting)

    by stewbacca (1033764) on Tuesday December 12, 2006 @06:09AM (#17205654)
    Legitimate users of iTunes have always confounded me. What with the way they dress and their holier-than-thou attitude.
    Not quite sure I'm holier than anybody, but I simply can't stand the wasted hours trying to find good (illegal) copies of music and tv shows, and weeding through all the porn/spam/malware, when I can avoid the whole fiasco by paying a couple bucks. I don't know what you are worth, but saving time and ending up with a legitimate and decent enough quality copy is worth the $1 to me.

    Instead of blowing us off as some elitist snob iTunes lovers, why not consider that money isn't always a huge factor for some people? The convenience alone is worth the price of entry.

  • by Mr2001 (90979) on Tuesday December 12, 2006 @06:36AM (#17205802) Homepage Journal
    You think that's clever, check this out...

    Sellaband [sellaband.com].

    The basic idea is lots of individuals contribute small amounts of money to get studio time for underground bands. Each band has a running total, and once they reach $50,000, Sellaband sends the money off to an agent who arranges for the band to record an album, which is then given away for free. Sellaband is quick to point out that all $50,000 goes to production, and they don't keep any of it for themselves.

    It's a great concept, and I encourage everyone to support those bands. However, $50k is a lot of money when the minimum contribution is only $10, and only one band has reached that goal so far. Meanwhile, other bands have raised tens of thousands, but it's just sitting in the bank for months collecting interest until they reach their goal - and guess who's raking it in.
  • by localman (111171) on Tuesday December 12, 2006 @06:54AM (#17205892) Homepage
    Just an anecdote, but I've spent far more on TV shows this year on iTunes than I ever did on music.

    Of course, I'm a weird nut who thinks it's worth $1.99 an episode to watch TV commercial free whenever I want, but don't own a Tivo.

    Cheers.
  • by soliptic (665417) on Tuesday December 12, 2006 @07:14AM (#17205982) Journal
    I keep seeing this on slashdot. All I can say is (with my tongue somewhat in cheek) that you guys must be listening to the wrong music!

    All the albums I buy have maybe 1 or 2 tracks I'm not overly fond of, max, and 10-15 that are good. And I'm not buying in any one genre either. Just looking at what I've bought in 2006, the following don't really have ANY weak tracks: Ojos de Brujo - Techari (Flamenco hiphop fusion), Breakage - This Too Shall Pass (dub-influenced drum'n'bass), Shpongle - Nothing Lasts (psychedelic global electronica). While these have maybe one or two that are slightly weaker, but by no means "don't want to listen to": Seth Lakeman - Freedom Frields (folk / singer songwriter), Minnie Riperton - Anthology (soul), Intex Systems - Research and Development (ambient and idm), Burial - Burial (dubstep / ambient), ICR - Day Trip (trancey drum'n'bass), King Curtis - Live at Fillmore West (soul / R&B), Sasha - airdrawndagger (progressive trance / house). Etc, etc.

    Seriously... if 90% of the tracks on the albums you're buying aren't worth listening to, I do have to suspect you're buying albums by artists that suck, it's pretty much that simple.
  • by Anonymous Coward on Tuesday December 12, 2006 @07:23AM (#17206032)
    iTMS is awesome for a very specific purpose: 1-hit wonders.
    I reminded myself last night why I do NOT use iTMS. We just got new cell phones for Christmas and my wife wanted "If I Had $1,000,000" by the Barenaked Ladies as a ring tone, but she couldn't find her Gordon CD since we've recently moved and it's boxed up somewhere. So I thought: "Hey, no problem, I'll just go download that track for 99 cents from the iTMS". Big mistake... her phone, of course, only accepts MP3s (among other lesser types) as ring tones and not protected-AACs even though it's one of those Motorola SLVRs with iTunes. I tried the "convert to MP3" option in iTunes but that doesn't work for DRM'd AAC files of course and it refused to even try. My only option seems to be to either find the stupid Gordon CD, burn a single track to a CD and re-rip it as an MP3, or download it from a P2P network. Since the blank CD-Rs are lost in some box like the music CDs I have to resort to the latter. I won't feel one damn bit of guilt though because we've bought that song multiple times now. I swear, once I find those CDs, I'm going to go through our entire collection and rip every one of them using some lossless codec and store them on a hard drive. Every time I purchase a song that employs digital restrictions management I get burned by it. Apple can take their iTMS and serve the sheeple. Everyone else is just going back to buying a physical CD and ripping it or P2P networks.
  • by skurken (58262) on Tuesday December 12, 2006 @07:48AM (#17206106)
    iTunes is treating the world outside the US like an unwanted stepchild. Many of the records that are available in the US shop and which are available on CD here in Europe cannot be bought from the iTunes Store. So, what do they expect me to do? I bought a lot of music from iTunes when the store came to Sweden in the first place, but when even such main stream things as a Disney soundtrack isn't available outside the US, it is no wonder people are heading back to the torrent sites (or record stores for that matter).
     
  • by Anonymous Coward on Tuesday December 12, 2006 @08:04AM (#17206196)
    "I have a nasty suspicion that a *lot* of people are technically ignorant to the extent that they believe buying it on iTunes is the only option to get it on to their iPod -- or that it is, in fact, faster."

    I'd bet your suspicion was WAY wrong.

    I deal with a lot of ignorant (technology-wise) people who all have iPods...I haven't once heard ANYONE say anything like this. Ever. The most ignorant ones tell me they still get their music from 'the Kazar' and think of the iPod as an MP3 player not an 'iTunes Player'.

    Its amazing how much the folks that know nothing about technology feel no need to 'follow the rules' (the again, I knew one guy that used this to find his back catalog that he lost when his wife threw him out of the house years ago, and doesn't even own his own CDs anymore...I'd like to see the RIAA sue him for that!).

    So I think your hypothesis is wrong. I'd say my belief was based around one single group, but I have two completely separate areas of focus these days (little overlap except when I'm blackmailing my friends into working a charity for my nonprofit side), and its the same belief from the technically ignorant on both (and they ALL come to me about this stuff because they know I'm a musician and a geek).

    Anyhoo...posted anonymously because its a stupid argument either way, and not insightful at all...
  • by SengirV (203400) on Tuesday December 12, 2006 @09:31AM (#17206692)
    I've backfiled my collection to a small degree from iTunes. Mostly in the 1-2 songs per album way you describe. I agree 100% with the original poster. I purchased just about all I'm going to purchase from iTunes because I have a pretty solid collection now. New music is total garbage and because of this, my iTunes purchasing habits have mirrored exactly what has been described - slowed to a snails pace.
  • by hey! (33014) on Tuesday December 12, 2006 @09:34AM (#17206712) Homepage Journal
    It's not even necessarily stupid. The trick is to keep costs low enough that people who want to listen to a single track buy it off your store rather than get up, find the CD in the living room, and rip that track.

    Most of us here probably listen to music more on their PC or portable players, but that doesn't apply to most people, who probably haven't ripped much of their music collection.
  • by supabeast! (84658) on Tuesday December 12, 2006 @09:38AM (#17206750)
    Early on, I thought that the iTunes store was great. But that was several years ago, and Apple's failure to enhance it with anything other than more content and higher but still crappy video resolution is pretty pathetic. There are still glaring bugs in the Fairplay DRM system, both in iTunes and on the iPod, that have not been fixed. Audio quality is still horrible, which is a shame given that iTunes and the iPod both support lossless AAC. And it doesn't help Apple that CD prices, at least in my area, have come down some; many CDs that were $17.99 two years ago have come to ~$13.

    iTunes needs a serious code overhaul, Apple needs to address the bugs in Fairplay and the iPod, and most of all, needs to at least double the bitrate of music being sold before I'll go back. And I imagine that its safe to assume a lot of other Apple customers feel the same.
  • by Lumpy (12016) on Tuesday December 12, 2006 @09:47AM (#17206862) Homepage
    People are lazy. People are stupid. People do stupid and lazy things.

    Yup, a Senior and her parents at my daughters high school tried to SUE another student for the cost of all her music on her ipod because he erased her ipod in class as a joke.

    The funny part is people ARE most certainly stupid, they don't even understand that plugging the ipod back into the computer will load all the music back on. These are really rich business executives and their child. Too stupid to understand, too lazy to even take a couple of minutes and read or even plug the stupid thing back in and watch it start automatically. (I guess their time as well as their childs time is EXTREMELY valuable)

    Says a lot about the state of intelligence in the world.

    BTW: it took their lawyer to explain to them the extremely complex operation of the Ipod before they understood what others told them many times.
  • by Kadin2048 (468275) <slashdot@kadin.xoxy@net> on Tuesday December 12, 2006 @10:17AM (#17207148) Homepage Journal
    I think you'd be silly to make a decision about the hardware based on the iTMS. Lots of people -- the majority of folks I know, actually -- use iPods and don't go near the Music Store. It's ridiculously overpriced; anyone in an urban area probably has a used CD store that's easier to browse and far cheaper, not to mention higher in quality.

    I am in no way a fan of the iTMS, but the iPods themselves are hard to beat. Particularly the new Nano (the metal one); it clears up my biggest objection to the old model, namely that it got scratched too easily. I've played around with some of the competition's flash-based players and they're all clunky and obnoxious to use compared to the Nano. (Which is not to say the iPod couldn't be improved; I'd still like it to have more tactile feedback and some sort of voice prompting so you could use it without looking at the screen, but apparently in Cupertino nobody drives a car and thus they've never tried to use one at the same time.)

    The iPod, combined with iTunes as a music-management program and nothing else, is a solid product; the iTMS should be considered independently, since it's not like the iPod is restricted to playing music from there or anything.
  • by Assmasher (456699) on Tuesday December 12, 2006 @10:56AM (#17207754) Journal
    While there is a constant demand for new music, much of the iTunes sale has likely revolved around people duplicating albums they either used to have, tapes they've got in a box somewhere, or all the one or two track purchases they avoided previously because they didn't want the whole album. Personally I've spent several hundred dollars there but mostly grabbing stuff I only had on tape or songs from albums that I didn't like as a whole, I rarely buy anything from iTunes now because bands I tend to prefer either no longer release albums or rarely do so.
  • by NewNole2001 (717720) on Tuesday December 12, 2006 @11:43AM (#17208524)
    The $150/month I pay Comcast tells me I can download any damned television program I want and timeshift it. I'm sorry if I'm not home when House or Heroes or the newest Nova comes on. I pay Comcast for a DVR which provides almost the same functionality as downloading the Divx rip of the show, and at higher resolution to boot. Yet I choose to download the show to watch at my convenience, on the medium of my convenience.

    Don't tell me that I haven't paid for the content. The $3/day Comcast is extorting from me tells me otherwise.

  • by Overly Critical Guy (663429) on Tuesday December 12, 2006 @11:55AM (#17208776)
    The WSJ already had an article [wsj.com] about the "stalling" of online music sales, claiming that it's happening for the first time. They include a chart, where you notice something interesting. The exact same thing happened last year (so it's not the "first time"), and then sales skyrocketed through the holidays as everyone got their nanos and iTunes cards. In fact, I remember the news coverage exactly 12 months ago talking about iTunes sales supposedly flatlining.

    This is another article people won't even remember after December and Apple posts their biggest sales figures yet. There are so many iPods out there sitting in wrapped boxes waiting for Dec. 25th...
  • by mstone (8523) on Tuesday December 12, 2006 @12:40PM (#17209588)
    The writer is Andrew Orlowski, folks.

    For those of you who've known The Reg for a while, that statement should be enough. For those of you who are newer to it, he leans more toward sensationalism and opinion masquerading as journalism than toward things like taking statements in context and checking his facts.

    He's the one who started the non-conflict between Richard Stallman and Miguel de Icaza over Mono. The original article is here. [theregister.co.uk] Stallman's response, which begins with "Your article about me, GNOME and .Net was inaccurate starting from the title. Those quotations which are accurate are taken out of context, leading to total misunderstanding," is can be found here. [theregister.co.uk]

    Orlowski also had (and possibly still has, I stop reading whenever I see his name in the byline) a grudge against Google. He did a whole series of pieces about 'googlewashing', in which he accused Google of censorship, and another series in which he argued that Google News isn't Real Journalism.

    On the few occasions where I've exchanged email with him personally, I found him rude, hasty, liberal with insults, and generally a putz. Back in Usenet days, he would have been called a classic flamer.

    To the extent that there are real facts in this article, I don't know what they are, and I don't trust Orlowski to have presented them in any way but the one that makes him look like a daring investigative reporter breaking the scandal of the century.

    Even assuming the premise of the article is true, and that Itunes Store sales have fallen dramatically, Apple will be the last one to care. The iTunes Store doesn't do much more than break even.

    And for the sake of completeness, I should state my own bias by mentioning that I've spent a couple hundred bucks at the iTunes store over the last year. I'll probably do the same next year, for whatever that happens to be worth.
  • Re:Me and Dr. DRM (Score:3, Interesting)

    by pandrijeczko (588093) on Tuesday December 12, 2006 @01:45PM (#17210672)
    Your points are well made but you seem to have forgotten the power of clever marketing - for example, BluRay and/or HD-DVD where the merits of "increased disc capacities" and "high resolution video" are frequently touted but the DRM lock-in is not mentioned in all those glossy magazine adverts.

    DRM is not going to go away that easily because far too many big corporations stand to make too much money from it - Microsoft (and others) for licensing the DRM algorithms and Sony/BMG/Warner/etc. for being able to force the consumer to re-buy all their music and video; even better for them, just have us all "rent" the stuff.

    If anyone can see any benefit for the consumer in DRM, then I am willing to listen to the pro-DRM argument - but the fact is that whilst I don't personally believe in downloading music or videos free-of-charge, it has not actually been proven yet that piracy has any direct impact on sales of music and films. All piracy has done is given the producers and retailers their justifications for raising the prices even higher ("because the piracy made us do it") meaning that as an honest consumer, who just wants to format change the stuff I own, I have to put up with anti-piracy adverts (that I cannot fast-forward through) and copy protection on media that I am expected to pay even more for. I guess, in one sense, the movie and CD companies have scored their victory on me because they've made me hate the pirates as much as I hate the MPAA/RIAA/Sony/etc.

    But the real "fact" here is that people have always bought music and movies to "share" with others - whether it's sitting on a couch with a few friends watching a movie or lending someone a CD, it's just considered "fair use" of those products in using them that way and DRM impinges on that usage to the point where honest consumers are also affected. Sure, it could be argued that sharing MP3s with someone 5,000 miles away is not "fair use" but then that's down to the technology of the Internet that allows that to happen.

    Personally, I believe people will pay money for products of high enough quality that are at a reasonable enough price - but the fact is that most movies and music are manufactured as "throwaway" fashion accessories rather than art to be cherished for long periods of time.

    DRM is an easy way out for the movie and music companies - the harder way out would be for them to actually take the time to produce good quality products.

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