iTunes Store Reaches 28% Overall Share, 70% Download Share of U.S. Music Sales

[pdjudd]

Oops, thanks, yes you're right of course - I did actually read it and understand it, I just wrote the wrong word in the crucial place, it should have read:

'70% of music downloads = 28% of total music sales in the US !?'

My point remains though, I think it makes a mockery of the suggestion by many that physical media is already 'dead'. Every time a thread comes up about Blu-ray for instance, people who say they aren't interested in it say 'physical media is dead', but if downloads of relatively smaller music files only account for less than half of all music sales, I think it's fair to say that we are still some years off physical media being 'dead' when it comes to movies.

But those figures are not an equivalent because they constitute different things - one being a subset of the other. Digital downloads are only a subset of music sales as a whole. Remember a critical part of CD sales that nobody really points out is that CD sales are a more entrenched business and are more widely available in brick and mortar as well as online (Amazon and for example sells both digital and physical media). Some business have 3 different systems of distribution (digital, brick and mortar, and online). Simply put, there are more ways to buy CD's than there are online retailers. iTunes for example is really popular, but they only do digital. There just isn't as many music download services out there - much less successful ones. Outside of Amazon and Apple, there really aren't that many successful digital music stores out there.

The fact is digital sales versus non digital just isn't a very comparable market

 

[DARKJ3DI]

I think a fairer comparison would be iTunes sales vs Limewire downloads

 

[Porco]

But those figures are not an equivalent because they constitute different things - one being a subset of the other. Digital downloads are only a subset of music sales as a whole. Remember a critical part of CD sales that nobody really points out is that CD sales are a more entrenched business and are more widely available in brick and mortar as well as online (Amazon and for example sells both digital and physical media). Some business have 3 different systems of distribution (digital, brick and mortar, and online). Simply put, there are more ways to buy CD's than there are online retailers. iTunes for example is really popular, but they only do digital. There just isn't as many music download services out there - much less successful ones. Outside of Amazon and Apple, there really aren't that many successful digital music stores out there.

The fact is digital sales versus non digital just isn't a very comparable market

Well I think it is very comparable, comparing the two is what the story is doing, after all. Sure, both have their differences, their advantages and disadvantages, but I don't think that means you can't compare the two... certainly in terms of things like market share. The 28% of total music sales and 70% of music download sales certainly are, literally, an equivalent, that is the whole point. If the 28% and the 70% figures were closer together then it would of course indicate that CDs etc are more of an irrelevance, but they're not, so they're not.

As for the rest of what you say, that's all fine, some good points, but it only backs up my point that physical media is far from dead yet, so I'm not arguing against those points at all.

 

[Zc456]

it much more than all of that. it aswell has your contacts ,email ect

and books with audiobooks also.

and podcasts and movies,tv


list continues

Music, Audiobooks, Movies & TV are fine; been like that since 5th gen iPod. These days it's the gatekeeper between your life and your iPhone. Not to mention handles all your apps.

 

[Huubster]

I find this unbelievable, considering that other online music stores are considerably cheaper, and offer mp3's without watermarks.

 

[SBlue1]

happy for apple they are making good money. not happy for consumers paying too much.

apple has no real competition anymore. when was the last time apple raised the price for something by 30% and got away with it, just like what they did with some songs in iTunes? i know amazon is cheaper, but its soooo damn easy to get a song with just one click within iTunes.

although when i buy whole albums i prefer to buy them at online record stores. cd has better quality and i can get it online for 5 to 7 euros, compared to 10 to 12 euros in itunes.

 

[SactoGuy18]

You can tell iTunes is still dominant when the Amazon MP3 Download store uses a downloader that automatically puts the downloaded song into the iTunes playlist. In fact, I'll almost bet even money that the vast majority of Amazon MP3 download store sales are to people using iPods, iPhones and now iPads.

 

[pdjudd]

Well I think it is very comparable, comparing the two is what the story is doing, after all.

Except again, you forget - that 28% figure is music as a whole - including downloads. You look at any subset of any market alone and the numbers can be quite misleading and don't necessarily mean what you may think they do. The fact that music sales are dominated so largely (nearly a third) by one player that sells music in only one method speaks volumes about the music distribution business in general.

Sure the rest of the market is 70 percent the other way, but that's all other retailers in general - that market is just naturally skewed by physical retailers since the number of iTunes like companies is rather small. Compare iTunes to the largest physical retailer (WalMart). Apple beats them pretty soundly despite the fact that WalMart has a huge nation-wide distribution. The only reason that "Other Guys" figure is so large is two fold: First, there is just a ton of places to get physical CD's. But iTunes still beats them all - but it's a huge market. That's because of number 2, CD's have been on the market about a decade longer than digital has been around. The adoption curve shows the trend.

Look, CD's still sell, but they are not going away any time soon since there is still a marketable demand for them - nobody is going to abandon the profitable retail model where there are tons of ways you can spread distribution and put all of your eggs in a few baskets. As long as there is a demand for CD's, they are still going to produce them. Of course the CD market didn't replace the LP market either - both were around for a long time. But with just one retailer commanding a third of all music total and not one of them is on a physical disc does say that CD's aren't as relevant as they once were.

In fact, I'll almost bet even money that the vast majority of Amazon MP3 download store sales are to people using iPods, iPhones and now iPads.

Oh indeed, Apple could care less if people bought MP3's from Amazon or if they got them from BitTorrent (though my guess is that they would prefer otherwise), but what they are really hopeful is that people are listening to their music on an Apple device. After all, the iPod family isn't the only player out there that can play AAC files.

 

[Tailpike1153]

Front page is a valuable and limited resource. Any company should have the right to reserve that resource for items that will bring in the most revenue. If the partner is selling the same item at a lower price at a competitor, it will not bring in as much revenue, as many customers will buy it from there despite the promotional efforts. It makes more sense to promote something else, where there is not any price disadvantage. Apple does not change its commission based on whether the song is sold elsewhere, not even whether it is sold cheaper elsewhere. It has a very limited front page space and if it is not allowed to decide how to allocate that resource, what is the point of owning that storefront?

Thank you. You are on my wavelength.

 

[Tailpike1153]

happy for apple they are making good money. not happy for consumers paying too much.

apple has no real competition anymore. when was the last time apple raised the price for something by 30% and got away with it, just like what they did with some songs in iTunes? i know amazon is cheaper, but its soooo damn easy to get a song with just one click within iTunes.

although when i buy whole albums i prefer to buy them at online record stores. cd has better quality and i can get it online for 5 to 7 euros, compared to 10 to 12 euros in itunes.

SJ/Apple didn't want to raise prices. But various labels, rights holders and associated parties demanded a more beneficial pricing structure and threatened to pull their content. Apple begrudgingly agreed. Behind the scenes, these labels have launched their own stores or made deals with Amazon, Walmart, etc to give them pricing advantage. All done to slow down or reverse iTunes retail dominance. But Apple with it Macs and iDevices are winning combo. Translating to #1 retailer status (at least here in the states). I compare it to horse owner trying to beat the stockings off her #1 colt to slow it down to let another one of her colts win the derby. Instead the #1 colt wins anyway.

 

[Hal Itosis]

Thus once again, I say if the justice department is going to investigate Apple for antitrust violations on something where there IS consumer choice for the SAME EXACT PRODUCT, then surely they should be looking at Apple where it is stifling the consumer's choice of hardware completely (again for those that want OSX by either choice or need). If this was by design, it might be one thing, but there are no technical reasons OSX can't run on say a Dell computer (e.g. I'm running it on one myself).

No technical reasons perhaps, but legal ones (in USA anyway). Thus it would appear that you are the law-breaker here. (or, at least in violation of the OS X software license.)

They have a small share of the overall installed *OS* market, but compared to other companies selling *HARDWARE*, their share is ANYTHING but small (see above links for Apple's profits in hardware compared to the competition and their share of $1000+ hardware). There's nothing "small" about them. The important thing here is to compare Apples to Apples (literally). You can say that buying a Windows machine is "equivalent functionality" but I think we both know that people don't buy a "Mac" because they think there's ANYTHING "equivalent" about the two operating systems. And if you already have a Mac software base or your company requires Mac software, you HAVE to buy Apple hardware whether you "like" what Apple has to offer (regardless of price, which is WAY high compared to the "competition" running another OS).

The point is if you are comparing music sales, you have to have pretty similar performance and the same song or it doesn't matter. MP3 and AAC are close enough in performance at 256kbit that they could be considered audibly equivalent and obviously the songs are the same. But if I compare a Mac Pro to a Dell Tower and they're not running the same software, that would be like comparing iTunes to Amazon but not looking at the same song. WTF is the point? That Dell hardware I desire (for either features or price) won't do me a bit of good if I need to run Final Cut Pro. They are simply NOT equivalent markets because they do not run/do the same thing. Apple is forbidding competition in their hardware market for OSX so they can keep ALL of the profits and THAT is why their profit margins are through the roof in the graph on that link above. They effectively have NO competition for hardware sales to those that want OSX.

If you want Windows (or Linux), you have several hardware vendors competing for your business. If you want OSX, you have Apple and that means VERY limited choices at highly inflated prices (e.g. no mid-range or low-end towers with expandability at ANY price; they simply do not exist and the Mac Pro is currently MASSIVELY overpriced for the horrible hardware you get; I mean a $2500 computer with a 640GB hard drive (a 1.5TB 7200 Seagate drive costs maybe $100 at most) and 3GB of ram (Apple's ram prices are notorious)? WTF!?!? Increase that to a mere two 1TB drives (so you have a backup) and 6GB of ram and you're pushing $3050!!! That's for a quad-core with a completely outdated graphics card. Want the ATI 4870 card? Add another $200 to the price for $3250 price and the card is STILL horribly outdated. Do you realize what kind of system I could build for a mere $1000-1200 today? It would run circles around the default $2500 Mac Pro in almost all areas. But what choice do you have if you want a Mac with some power and don't want to hack? NONE. You're stuck with Windows or Linux.

I'm sorry, but that's PATHETIC and worse yet it's really bad publicity for the "Mac" market (i.e. no value). And I say it violates the Clayton Antitrust Law "tying" clause. There is no doubt they violated the clause in the "tying" sense. There isn't even an argument to be made there. The law is quite clear that no contracts shall impede competition by forcing the sale of another item. The only question is whether Apple's hardware market share and anti-competition is having a "significant economic effect" or not. Looking at Apple's profit graph linked above compared to the other companies earning a pittance by comparison, I don't see how ANYONE in their right mind could argue that Apple isn't having a "significant economic effect" on that market, especially in light of the case they are looking into (the music sales), which are <30% of the overall music market and so I don't see how having over 30% of the profits of the computer hardware market does NOT qualify as "significant" and therefore a violation of Clayton.

You're the one who's "tying" things. You have tied "users who want OSX" to "users who don't want to pay for Apple hardware" and made that combination into a special interest group who deserves special rights. If that argument held any water, Apple probably wouldn't even exist today. Their main *business* is selling hardware... and you want to take that from them, by forcing them to help Dell sell more machines by wrapping them with a pretty OSX ribbon. [???]

Better just keep (silently) hacking... because those legal fantasies will never fly.

 

[col sandurz]

They have a small share of the overall installed *OS* market, but compared to other companies selling *HARDWARE*, their share is ANYTHING but small (see above links for Apple's profits in hardware compared to the competition and their share of $1000+ hardware). There's nothing "small" about them. The important thing here is to compare Apples to Apples (literally). You can say that buying a Windows machine is "equivalent functionality" but I think we both know that people don't buy a "Mac" because they think there's ANYTHING "equivalent" about the two operating systems. And if you already have a Mac software base or your company requires Mac software, you HAVE to buy Apple hardware whether you "like" what Apple has to offer (regardless of price, which is WAY high compared to the "competition" running another OS).

I agree with you that there is something special about OSX that makes it one of the biggest reasons to purchase a Mac. However, there are other reasons as well, such as the inherent stability of the hardware. This stability comes precisely from the more closed architecture and the careful planning of tested components (i.e. not putting in infant technology simply because its new). So, yes, Mac hardware and OSX are tied. But, that is part of the reason they are good.

Now, in the eyes of big business and legislators, Macs perform essentially the same computing functions of PCs. Therefore, when it comes to product competition, the competition still exists. Your argument presumes that OSX and Mac hardware are separatable products. Yet, they are designed by the same company to work together as two components of the same task. Your argument is akin to saying, "I like the engines that BMW produces, but I really don't like BMW cars; the government should step in, break up BMWs monopoly on cars with BMW engines, and allow us to purchase Fords with BMW engines." Despite how juicy or convenient such a scenario may seem, its not going to happen.

 

[Porco]

Except again, you forget - that 28% figure is music as a whole - including downloads. You look at any subset of any market alone and the numbers can be quite misleading and don't necessarily mean what you may think they do. The fact that music sales are dominated so largely (nearly a third) by one player that sells music in only one method speaks volumes about the music distribution business in general.

No, I don't forget, and the figures mean exactly what I think they mean.

Sure the rest of the market is 70 percent the other way, but that's all other retailers in general - that market is just naturally skewed by physical retailers since the number of iTunes like companies is rather small. Compare iTunes to the largest physical retailer (WalMart). Apple beats them pretty soundly despite the fact that WalMart has a huge nation-wide distribution. The only reason that "Other Guys" figure is so large is two fold: First, there is just a ton of places to get physical CD's. But iTunes still beats them all - but it's a huge market. That's because of number 2, CD's have been on the market about a decade longer than digital has been around. The adoption curve shows the trend.

Look, CD's still sell, but they are not going away any time soon since there is still a marketable demand for them - nobody is going to abandon the profitable retail model where there are tons of ways you can spread distribution and put all of your eggs in a few baskets. As long as there is a demand for CD's, they are still going to produce them. Of course the CD market didn't replace the LP market either - both were around for a long time. But with just one retailer commanding a third of all music total and not one of them is on a physical disc does say that CD's aren't as relevant as they once were.

Of course CDs aren't as relevant as they once were, but it's a stretch to go from that to believe, as some people seem to, that CDs are completely irrelevant to everyone already. It's a transitional period, but iTunes has been selling music for 7 years and they're at 28% (or if you prefer, downloads in general are at about 40%). It's not like CDs were made redundant the day after the iTunes store opened, or even 7 years after...

You're still essentially arguing about something that I'm not... It doesn't matter how you explain why physical media is still outselling downloads, (though I think you may be right in what you say about that to some extent) - the fact is it is, and I think it's a fair conclusion from that to pour scorn on the constant 'physical media is already dead' myth that keeps being repeated on techy internet forums.

These figures indicate physical media is not dead yet, that's all I'm really saying. Like you say, "CD's still sell, but they are not going away any time soon since there is still a marketable demand for them". I would argue ditto for DVD and Blu-ray, more so if anything.

 

[Hal Itosis]

Of course CDs aren't as relevant as they once were, but it's a stretch to go from that to believe, as some people seem to, that CDs are completely irrelevant to everyone already. It's a transitional period, but iTunes has been selling music for 7 years and they're at 28% (or if you prefer, downloads in general are at about 40%). It's not like CDs were made redundant the day after the iTunes store opened, or even 7 years after...

You're still essentially arguing about something that I'm not... It doesn't matter how you explain why physical media is still outselling downloads, (though I think you may be right in what you say about that to some extent) - the fact is it is, and I think it's a fair conclusion from that to pour scorn on the constant 'physical media is already dead' myth that keeps being repeated on techy internet forums.

These figures indicate physical media is not dead yet, that's all I'm really saying. Like you say, "CD's still sell, but they are not going away any time soon since there is still a marketable demand for them". I would argue ditto for DVD and Blu-ray, more so if anything.

I hate to toss in a monkey wrench here... but, i'm pretty sure those statistics don't include pirated downloads. I'll bet the percentage granted to physical media would shrink substantially, if all the illegal "consumption" was factored in.

 

[col sandurz]

I hate to toss in a monkey wrench here... but, i'm pretty sure those statistics don't include pirated downloads. I'll bet the percentage granted to physical media would shrink substantially, if all the illegal "consumption" was factored in.

Piracy does not support the market though; thus, it will have less pressure on what medium becomes standard. Additionally, people pirate physical media as well.

 

[Porco]

I hate to toss in a monkey wrench here... but, i'm pretty sure those statistics don't include pirated downloads. I'll bet the percentage granted to physical media would shrink substantially, if all the illegal "consumption" was factored in.

Sure, but the story is about 'market share' of music sales, and pirated music obviously accounts for 0% of sales. As col sandurz indicates above, it's about what sells / makes money, not how many people are getting around being involved in that group of paying customers at all.

 

[louis Fashion]

While analogue formats can be, in principle, flawless, in practice they are not of limitless quality.

Vinyl has a dynamic range of about 80dB, whereas CD Digital Audio (aka "Red Book") has a dynamic range of about 96.7dB. Groove definition deteriorates slightly each time the stylus runs through, weakening the accuracy of reproduction with every playback. Additionally, groove compression occurs in recording when the master stylus puts pressure on each concentric groove of the spiral, creating a different frequency response from the inner to the outer platter--even from the left to the right channel! Not to mention the conventional tone arm and belt turntable will experience a slight shift in RPMs as the stylus travels from the edge to the center.

Digital recording and reproduction systems, by contrast, offer far more stability, where internal reclocking of the signal guarantees constant playback speed, where the medium itself doesn't introduce a noticeable noise floor and thus allows greater dynamic range. Digital formats beyond CD Digital Audio (16 bit Linear PCM), such as 24-bit Linear PCM (DVD-Audio, HD Audio) carry the abilities of digital even further beyond the threshold of human perception... but even for critical listening, 16-bit LPCM has a fidelity, clarity and dynamic range unmatched by any consumer-available analogue playback medium.

The "warm" sound of vinyl is really inaccurate reproduction as a result of a sharply elevated noise floor. Of two recordings mastered equally well, the digital master will sound vastly superior to the analogue for this reason alone... particularly evident in highly dynamic genres such as classical, jazz and others that, ironically, seem to attract vinyl enthusiasts. They couldn't pick a medium more poorly suited to the nuances of Dave Brubeck, John Coltrane, Miles Davis or Ahmad Jamal recordings.

Where the difference is relatively moot is in more recent sound recordings in pop and rock, where amplitude pumping has become so commonplace, it doesn't matter how pristine a medium you use... the original recording has no dynamics, always pegging the needle. You could be listening to it recorded on crumpled wax paper, edited with a potato peeler and played back through garbage cans (with little B&W stickers on them if you like) and it would sound just as good.

WOW! Fanned. What about music purchased on iTunes. Many people here on MacRumors can not tell the difference between a CD and an iTune?

 

[Hal Itosis]

Sure, but the story is about 'market share' of music sales, and pirated music obviously accounts for 0% of sales. As col sandurz indicates above, it's about what sells / makes money, not how many people are getting around being involved in that group of paying customers at all.

Totally misses the point... i'm not talking about the story, i'm talking about your words (which is why i quoted you instead of post #1). You're trying to say that physical media is still in huge demand, based on statistics which don't consider other types of downloads. The percentage attributed to physical media is therefore inflated, and thus probably much less significant than you're trying to make it out to be.

These figures indicate physical media is not dead yet, that's all I'm really saying.

It's far deader than those figures alone are capable of showing.

 

[Hal Itosis]

WOW! Fanned. What about music purchased on iTunes. Many people here on MacRumors can not tell the difference between a CD and an iTune?

Why ask "how many people"? [only one person said that particular quote.]

And under which conditions? [at a party, or using headphones with our eyes closed?]

I.e., what's your point?

 

[Porco]

Totally misses the point... i'm not talking about the story, i'm talking about your words (which is why i quoted you instead of post #1). You're trying to say that physical media is still in huge demand, based on statistics which don't consider other types of downloads. The percentage attributed to physical media is therefore inflated, and thus probably much less significant than you're trying to make it out to be.

Well my words were in the context of, and in response to the story...

I get your point, I do, but physical media is not going to be anywhere near 'dead' until legitimate, paid-for downloads are selling more than CDs by a considerable margin.

You'd have more of a point if we were discussing 'usage' or 'consumption method' or something devoid of having to consider what actually makes the content producers/owners/distributors money, but again, the story, and my argument in response to its statistics are about market share of sales, not just how music is obtained regardless of legality (or more specifically the money made). So pirated downloads just don't really play into that in that sense, because they don't have a market share, by definition, they make no money.

I'm sure some pirates still buy (or steal or copy) CDs too!

 

[opeepingtomo]

My problem with iTunes is that they only offer 256k music at higher prices than everyone else most of the time.

For example, i prefer AAC files over MP3 of the same bitrate, but 90% of the time i can get the same song that is 1.29 @ 256k on iTunes from 7digital at 320k for .77 to .99 cents

Now there are some songs that i will get on iTunes, for example, if they are the same price and same bitrate on 7digital i will get them on iTunes, but iTunes seems so uncompetitive pricewise

If itunes would offer lossless or at least 320kbps for .99 i would be more inclined to buy a lot more music from the store, but until then the music that i do download i will continue to select carefully and probably get it from 7digital most of the time

I know the last thing on Apple's mind is "fair"
But why not .99 on the high end for AAC files @ 320k
and 1.29 for ALAC files (if they ever choose to offer them)

And enough of the record companies and their select songs that are always "album only", it makes me sick

 

[Avatar74]

WOW! Fanned. What about music purchased on iTunes. Many people here on MacRumors can not tell the difference between a CD and an iTune?

The difference between 256 KBps AAC perceptual encoding and dithered 16-bit Linear PCM (CD Digital Audio) is pretty negligible. The Audio Engineering Society, deems the difference imperceptible. I've heard tons of anecdotes to the contrary but haven't seen a lick of hard studies published in peer-reviewed journals (I'm a member of SMPTE, for one thing) to support the claims that AAC @ 256 Kbps is noticeably different from 16-bit LPCM.

What's funny is that, while humans all have very similar hearing and perception as we're wired pretty much the same (within a relatively limited range of variance), there's a disproportionate number of claims of difference that originate from people who were talked into spending many thousands of dollars more on sound equipment than they needed to.

The real test is not to ask users "which sounds better" but to do a double-blinded study in which neither the participants nor the test supervisors know which samples are which, and ask the subjects to identify which one is AAC and which one is LPCM. Also needed would be a control group in which you tested placebo effect by mislabeling some of the samples so that the user thinks they're hearing AAC when they hear PCM and vice-versa, but randomly some times, not all of the time. I will bet money that you'll get a concentration of false positives on the samples labeled PCM whether or not they really are PCM samples. Yet another control test would be to randomly insert the same format/sample twice, and see how frequently people identify them as two different formats. If the results of the "which format is which" test aren't any more consistent in accuracy than randomly guessing, then the claim of noticeably better fidelity is bogus. If the results either of these placebo controls throws off the subjects' accuracy to a statistically significant degree (and you can bet they will), then the claim of noticeably better fidelity is substantially bogus.

 

[opeepingtomo]

The difference between 256 KBps AAC perceptual encoding and dithered 16-bit Linear PCM (CD Digital Audio) is pretty negligible. The Audio Engineering Society, deems the difference imperceptible. I've heard tons of anecdotes to the contrary but haven't seen a lick of hard studies published in peer-reviewed journals (I'm a member of SMPTE, for one thing) to support the claims that AAC @ 256 Kbps is noticeably different from 16-bit LPCM.

What's funny is that, while humans all have very similar hearing and perception as we're wired pretty much the same (within a relatively limited range of variance), there's a disproportionate number of claims of difference that originate from people who were talked into spending many thousands of dollars more on sound equipment than they needed to.

The real test is not to ask users "which sounds better" but to do a double-blinded study in which neither the participants nor the test supervisors know which samples are which, and ask the subjects to identify which one is AAC and which one is LPCM. Also needed would be a control group in which you tested placebo effect by mislabeling some of the samples so that the user thinks they're hearing AAC when they hear PCM and vice-versa, but randomly some times, not all of the time. I will bet money that you'll get a concentration of false positives on the samples labeled PCM whether or not they really are PCM samples. Yet another control test would be to randomly insert the same format/sample twice, and see how frequently people identify them as two different formats. If the results of the "which format is which" test aren't any more consistent in accuracy than randomly guessing, then the claim of noticeably better fidelity is bogus. If the results either of these placebo controls throws off the subjects' accuracy to a statistically significant degree (and you can bet they will), then the claim of noticeably better fidelity is substantially bogus.

The good thing about lossless thought is that it is a good means for a permanent copy in case you ever need to convert to a different format other than AAC or MP3.

It may be negligible as far as the difference in the sound quality when listening to lossess vs AAC but for converting to other formats that is where the lossless format also is beneficial because converting from one lossy format to another is horrid