Music Labels See Slower iTunes Sales Growth in Wake of Price Increases

[MacRumors]

MediaMemo notes that Warner Music Group has reported seeing slower sales growth via Apple's iTunes Store since the introduction of variable pricing last year.

Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple's iTunes (AAPL) decelerate since the price increase: Industry-wide, year-over-year "digital track equivalent album unit growth" was at 5 percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.

And since iTunes sales make up the majority of Warner's digital revenue, growth is contracting there, too. In the last quarter, digital revenue at the label was up 8 percent compared to the previous year; a year earlier that number was 20 percent.

According to the report, Warner CEO Edgar Bronfman, Jr. claims that the pricing increase has been a "net positive" for the company as it sees the music download business maturing, but acknowledges that raising music prices 30% during a recession may not have been a smart move.

Apple has continued to maintain a nearly 70% share of the overall digital music download market, and last year reached 25% of the total music market in the U.S. as customers continue to move away from physical CD sales in favor of digital distribution.

MediaMemo points to Warner's example as a warning for book publishers, who have begun leveraging Apple's iPad in dealing with major eBook retailers such as Amazon to gain greater control over eBook distribution and increase prices.

Article Link: Music Labels See Slower iTunes Sales Growth in Wake of Price Increases

 

[spencers]

Of course it was a bad idea

 

[Kaibelf]

Idiots. Of course people don't want to pay more, and are less likely to buy if the prices increase. Who hired these idiots?

 

[c-Row]

Omg!

Breaking news! Sales decrease if prices increase! What will they realize next?

 

[gwangung]

According to the report, Warner CEO Edgar Bronfman, Jr. claims that the pricing increase has been a "net positive" for the company as it sees the music download business maturing, but acknowledges that raising music prices 30% during a recession may not have been a smart move.

Ya think?

What happens to people when they become CEOs? Get lobotomies on the parts of the brain that think like the customer?

 

[kirky29]

Warner CEO Edgar Bronfman, Jr. claims that the pricing increase has been a "net positive" for the company as it sees the music download business maturing, but acknowledges that raising music prices 30% during a recession may not have been a smart move.

Really.

 

[tigres]

As Gordon Would say...

Greed is Good...

 

[Padraic]

Well that was obvious... And to think these guys get PAID to run a business.

 

[pmasters]

Well Duh. How arrogant was the music industry to think that sales would keep chugging along with a price increase?

 

[bobbleheadbob]

I generally don't buy from iTunes anymore. Amazon is usually cheaper -- .89 or .99 cents. That's where my business went.

 

[Kwill]

Here's the formula

charge more = sell less

 

[rdowns]

And I'm sure the record companies are all smiling over it. They wanted Apple to lose market share. They all think Apple has too much influence in the music business.

 

[Davey782]

I defected to Amazon.com/MP3 Downloads

Amazon's prices are frequently still at the $0.99 price point for the music I buy. I have seen a few recent singles I wanted for $1.29 on amazon, in which case I'd buy it from iTunes if I really want it.

Bottom Line: Consumers should be able to shop around for their digital music just like they shopped around for CDs!

 

[fishcove]

Warner CEO Edgar Bronfman, Jr. ... acknowledges that raising music prices 30% during a recession may not have been a smart move.

With brilliant leadership like this, how is it that the music industry continues to struggle?

 

[topgunn]

This isn't about fewer sales, it is about less sales growth. Their business is still going up but just not as fast. You can't expect to grow your revenue 20% year after year. It's called market saturation.

I highly doubt that there are many people out there who were readily buying songs on iTunes for $0.99 and now scoff at the idea with prices of $1.29. It is still a throw away amount.

 

[FSMBP]

I generally don't buy from iTunes anymore. Amazon is usually cheaper -- .89 or .99 cents. That's where my business went.

Ditto my brother.

Amazon offers same content but cheaper. Also, I don't want to push iTunes into being the sole place, in the future, to buy music/videos/movies - as monopolies won't benefit anyone.

 

[Adokimus]

Idiots. And of course history is repeating itself with eBooks. Greed overtaking logic and sound business practices. Stop making yourself the enemy of your consumers and you'll do better... novel idea

 

[Consultant]

Breaking news! Sales decrease if prices increase! What will they realize next?

Yup. Some people fell asleep in economics 101.

 

[exabytes18]

I generally don't buy from iTunes anymore. Amazon is usually cheaper -- .89 or .99 cents. That's where my business went.

This.

While not as convenient as iTunes, Amazon's music store is decent.

 

[Some_Big_Spoon]

And that's the RIAA's plan - undermine iTunes by driving traffic elsewhere, either to Amazon, or to Pirate Bay. Anything they can do to point to an iTunes failure is good for their short term prospects (most CEO's don't think long term, as they'll be gone before the ramifications of their decisions come to a head).

Best thing for them in the short term is if more people "pirate" - they'll use that to coerce governments to pass harsh laws which aim to push your average person to purchase the more expensive, more locked-down, hardest to share, solution.

Or, they could just be greedy and dumb.

I generally don't buy from iTunes anymore. Amazon is usually cheaper -- .89 or .99 cents. That's where my business went.

 

[Sky Blue]

but acknowledges that raising music prices 30% during a recession may not have been a smart move.

Smart man.

 

[lazyrighteye]

Well duuuh...

 

[ericinboston]

1)No blame on maybe that the music available these days stinks? Or that fewer releases have been released? Nope, just blame pricing.

2)I've purchased 2 songs from iTunes in my 5+ years of being an iPod owner and iTunes user...I still buy cds all the time because the quality is MUCH better than mp3s. Not all of us want music whose quality is less than a format that was released in 1980 (the cd). Release the music in lossless format and I'll begin buying immediately.

3)So what...the music biz is immune to any kind of "decrease in sales"!?! Sheeeez. I'm surprised they didn't blame piracy.

4)Sure, pricing MAY be a factor but come on...

-Eric

 

[levitynyc]

No ****.

 

[JGowan]

I buy Used (Very Good) CDs from Amazon.com... physical media... only way to go! Cheaper too! Then I rip at 320kbps -- I say boo to 256 AAC. And I really say BOO to tracks that are $1.29!!!