Apple to Sell 37 Million iPods 2005?

[MacRumors]

http://www.macrumors.com/images/macrumorsthreadlogo.gif

One analyst believes that Apple may have sold as many as 37 million iPods by the end of 2005.

'We expect the iPod to continue to be a foundation for growth in other parts of Apple's business, and we expect that by the end of calendar 2005 more than 37 million iPods will have shipped, providing Apple with a greater scope of awareness for various products'

Apple's iPod sales, however, hasn't yet translated into booming music download sales according to this Bloomberg report. According to that article, digital download sales have plateaued and are still a small percentage of total music sales. As a result, music industry leaders are still pushing for a multitier pricing to boost income.

[terrorbite]

I really hope they don't introduce multitier pricing. Knowing my luck, all the music I want will be more expensive Also, if they increase the price of albums it will be cheaper to buy the actual cd from stores like Amazon.

And woo, first reply.

[Hertog]

Originally Posted by Macrumors

http://www.macrumors.com/images/macrumorsthreadlogo.gif
According to that article, digital download sales have plateaued and are still a small percentage of total music sales. As a result, music industry leaders are still pushing for a multitier pricing to boost income.

Yes, that will probably increase sales, making songs more expensive..

[cxny]

That's a cumulative total not 2005 only numbers, though still an impressive figure.

[HiRez]

The quote to me sounds like they expect Apple to have sold a total of 37 million by the end of 2005, not 37 million in 2005, which is sort of what the article makes it sound like. That would mean 19 million sold in 2005 to meet that mark. Still optimistic, but not impossible,

[rtdunham]

either you didn't quote the pertinent parts of the report, or the report simply expects accrued sales to reach 37M by the end of 05. The quote you included in your report supports only that conclusion, and not your idea that it's reporting sales in the year. Can you clarify your report?
thanks
terry

[chukronos]

19 million sales seems possible, but not likely, to me, with the iPod shuffle and such.
-Chuc

[nbs2]

I may be missing something. What is the logic in boosting prices? More iPods are sold, music sales are flat. How does multi-tiered pricing, meaning higher prices on "popular" music, boost online sales? I would expect the higher prices to reduce demand online, boosting it at traditional media. Wouldn't the labels be better served by extending the scheme for one year and seeing whether there is a trickle-down from iPod to music sales?

I did go to wal mart and compare the 14.99 for a CD vs. the 9.99 itunes. If price had been the same, I would have opted for physical media. Wouldn't this result in lower income for the labels? I'm sure that I could find a good post in the myriad of threads here that would present a rational economic argument. But, that would take a long time. Any economists want to save me the time and explain it here?

And a final question. If Apple doesn't budge, and the labels don't budge, does that mean the iTMS becomes a video store. And do the labels really think they could win a PR battle?

[jrv3034]

99 cents is the magic number. Don't change it.

And I agree, it sounds like the quote means that a total of 37 million iPods will have been sold by the end of the year since 2001, not just in 2005 alone.

[manu chao]

Originally Posted by jrv3034

99 cents is the magic number. Don't change it.

Right, if they want to have multi-tiered pricing why not introduce $0.79 songs?

They could naturally introduce lossless songs for $1.49, although part of that extra 50c would be eaten up by two to three times higher streaming costs.

[cxny]

Originally Posted by nbs2

I may be missing something. What is the logic in boosting prices? More iPods are sold, music sales are flat. How does multi-tiered pricing, meaning higher prices on "popular" music, boost online sales?

I did go to wal mart and compare the 14.99 for a CD vs. the 9.99 itunes. If price had been the same, I would have opted for physical media. Any economists want to save me the time and explain it here?

You are assuming most people will buy a full album, while I personally prefer to hear music the way the artist intended it, most people like to "cherry pick" the hits which means that the labels get only a couple of bucks out of a typical albums songs. I think tiering may be beneficial as long as complete albums don't go above $10.00

[Photorun]

Another thought on this (just an thought, nothing concrete) is at one point is there market saturation for the iPod... that is, when people who have the money or the where-withal to buy one sales will slow down significantly. This same principle has effected computer sales, once the people who would have a computer bought one, aside from the upgrade cycle or the "oooh, shiny" buyers, at some point iPod sales should fall off. Relevant to this it seems many of my acquantances from college students on up to even some peeps in their late 40s have an iPod, at what point is there that people own them will slow the sales.

[arn]

Originally Posted by rtdunham

either you didn't quote the pertinent parts of the report, or the report simply expects accrued sales to reach 37M by the end of 05. The quote you included in your report supports only that conclusion, and not your idea that it's reporting sales in the year. Can you clarify your report?
thanks
terry

Yep, I think you're right... looks like it may have been misinterpreted. it appears 37 million all time ipod sales.

arn

[2A Batterie]

Eventually Apple's wild ride on top is going to end unless they change some tactics. Tethering consumers to the iPod and iTunes and the iTMS can only last for so long. Understandably, Apple wants to keep everything exclusive to drive up profits, and it has worked very well so far because other companies can't come up with product that comes close to the iPod or iTMS. I just fear that eventually Apple is going to shoot itself in the foot by not budging on such issues as pricing nd compatibility. I also think that record companies are getting a bit fed up with Apple's stubborn attitude... at least that is the vibe I am getting from music trade magazines. I'm not trying to flame Apple, as I love their products, I just hope they don't end up screwing themselves.

[nichos]

Shouldnt that read "Apple to Sell 37 Million iPods by 2006?" 2005 is already here.

[macmansc]

I think the key in the quotes are to boost profits not necessarily sales. If they can sell songs at $2 each then they don't have to sell as many. I'm sure that the sales would drop though. Increases in costs, whether taxes or prices don't lead to increased sales.

[centauratlas]

Originally Posted by nichos

Shouldnt that read "Apple to Sell 37 Million iPods by 2006?" 2005 is already here.

It should read:

"Apple to Sell 37 Million iPods by the end of 2005" depending on what they are saying.

Also this is messed up too:
"One analyst believes that Apple have sold as many as 37 million iPods by the end 2005"

It should be:
"Apple will have sold..." (given what the report seems to be saying)

[Stella]

.. and if Music download sales were significant the music industry would be saying the market is mature enough to allow price hikes ( whilst still screwing artists ).

Any excuse to fleece the consumer.

>Quote
According to that article, digital download sales have plateaued and are still a small percentage of total music sales. As a result, music industry leaders are still pushing for a multitier pricing to boost income.

[centauratlas]

Originally Posted by 2A Batterie

just fear that eventually Apple is going to shoot itself in the foot by not budging on such issues as pricing nd compatibility. I also think that record companies are getting a bit fed up with Apple's stubborn attitude.

1. Apple is attempting to keep switching costs as high as possible so that people are locked in. If you have a $99 iPod shuffle, but have $990 (0r $495 or $99 or ...) of iTunes songs that you've purchased you are probably going to buy another iPod when drop the shuffle too many times or whatever. Eventually the hardware will become (for many people, not just those of us who are here) the less valuable part of the equation. I now have 15234 items (songs, audio books etc) in my iTunes library (all legal, most from older CD that my parents had and ones I had) and so the cost of the iPod itself is negligible in comparison to the cost of the music.

Allowing the songs to be played elsewhere would hurt this goal. Later, once the market has matured, they will be able to *judiciously* license to others. Until then, their logic is that they need to keep it closed until they have control on the consumer side, which means control on the record company side. To get the recording industry to change, there needs to be a big player to challenge them.

2. I think increasing prices would be a bad idea for the same reason - you want people to get as much as possible. I believe that was the intent behind the "free music <whatever day>" - get people to download iTunes and get a free song meaning that no matter what, if you buy a non-iPod player you will have to throw out some music. Psychologically not what people want to do.

3. For me, I'll buy CDs if they are pretty close in price to the version on iTunes. If I only want one song from the CD, then I'd do iTunes, otherwise the CD. The problem is that on most CDs there are 2 or 3 songs (at most) that you want. Once the recording industry sees that people usually buy CDs for just a few songs, it will have to change.

4. The CD model is essentially - buy this one (or 2 or 3) song on CD for $11.99 and get the rest of the songs for free. iTunes says - buy this one song for $0.99 and don't get the rest of the songs. That is the key analysis of the difference in economics of the two. It is a LOT easier to just spend $0.99 on one song on a whim than $11.99 on a whim.

The conclusion is that digital downloads have NOT plateaud or anything close too it. The so-called analysis that argues that is as wrong as the ones who thought the VCR would kill TV and movies and...

You'll get a lot more people to buy singles when it is easy and quick and people don't have to worry about losing their music. Other arguments ignore history and ignore human behaviour.

These are the same group who said things like "It's going to be the biggest bust of all time" - Jack Warner of Warner Bros Studios prior to the Dec 1939 release of Gone With The Wind.

[whiskeybravo]

Originally Posted by Macrumors

As a result, music industry leaders are still pushing for a multitier pricing to boost income.

OK, don't flame me 'cause I'm just trying to be a little funny here. I guess we can now conclude that the record companies are full of Democrats since they obviously understand that raising the unit price (tax) automatically results in a like increase in revenue. Certainly nothing wrong with this economic model

There is a problem breaking below the .99 level, the credit card companies want nothing to do with it. Higher prices will certainly hurt sales, but the $64 million question is will it hurt them enough to offset the price increase? The record companies want to play with it and see. They aren't interested in a price model based on costs, they are interested in determining what the market will bear. Maybe they are capitalists afterall

[Maestro64]

What this is saying is the people who are buying ipods are not new customers to itunes. Meaning current Ipod users are replacing the existing ipods and most likely they are giving away or selling thier old iPods with the songs on them. Apple may be selling 19 million ipods this year but most of them are replacements to exisiting users and not going to new users so the growth is slowing instead of growing.

On the point of raising prices this is called the death spiral, companies who are use to yr over yr growth and then see a slowing they raise prices in hope to maintian or improve their profits which most of time have the reverse affect people buy less so they raise prices again to try an maintain until they die.

Face it, the people who listen to music all the time is a finite size, it will only be so big and once everyone owns a song or ipod it will then becomes harder and harder to get them to buy another one.

In the past the music industry would release another CD/Album with a different mix of songs to get to you buy again. In the new model why would you do that, you already own the songs you want without having all the other songs you do not like. This is what the music industry is worried about. Once you have the digital version you will never have to buy the song again.

I have a friend who once owned all his songs on 8 tracks, & LPs and when casettes came out he again bought them all over again plus new ones, Then CD and bought again plus new ones and now he is on mp3s and loves it since he will never have to buy again. Do you think the Music industry likes this.

[manu chao]

Originally Posted by centauratlas

1. Apple is attempting to keep switching costs as high as possible so that people are locked in.
.... most from older CD

Your point is correct, however applies only to people who buy a lot from the iTMS, which the majority of iPod owners probably don't do (take you for an example). Anything you have on CD, you can re-rip if you would like to get a different MP3-player.

Originally Posted by centauratlas

A) The problem is that on most CDs there are 2 or 3 songs (at most) that you want.
B) It is a LOT easier to just spend $0.99 on one song on a whim than $11.99 on a whim.

While I agree with B), as I myself have done a couple of impulse buys on iTMS, I find it a real drag to listen to any individual songs. Choosing a new song every 3.5 min is not something I want to do, and building my own playlists take way too much time.

[jrv3034]

Originally Posted by manu chao

Right, if they want to have multi-tiered pricing why not introduce $0.79 songs?

I highly doubt they're talking about lowering prices. One should only assume that they mean "popular songs for $1.99, crappy songs nobody wants for $.99."

Maybe a few obscure songs from some band in Mongolia or Iceland would be offered for $.79...

[manu chao]

Originally Posted by Maestro64

Apple may be selling 19 million ipods this year but most of them are replacements to exisiting users

Sure, everbody who bought an iPod in 2001-2004 will upgrade it exactly this year. This would generate sales of 18 m iPods this year.

[cr2sh]

Originally Posted by MacRumors

According to that article, digital download sales have plateaued and are still a small percentage of total music sales.

And reality kicks in.