|Apple's iTunes Sells 1 Million Songs in First Week – Labels Will See New Revenue Model|
|Home Theater News Music - Download Technology News|
|Written by Jerry Del Colliano|
|Thursday, 08 May 2003|
Apple reported that they sold 1,000,000 downloaded songs in their first week of selling music to Mac users right in their iTunes software. That is one heck of a performance considering that Apple has 11.5 percent of the overall computer market and not all of those users download files, have an iPod and or have downloaded the new iTunes4 software. That marketshare is likely to grow as Apple is planning on offering iTunes for PCs to go along with the PC version of the iPod. Other sites like the re-born Napster will also offer a similar business model for downloading music on a pay per song basis which will increasingly allow consumers to buy music directly on their computer.
In its first week iTunes 4 offers a broad sampling of songs but the breadth of their overall downloadable catalog is not anywhere near as deep as the peer to peer systems. This is mainly because the labels haven’t given up all of their songs as they wait to see if the model of pay for downloadable music works in 2003. With 1,000,000 total songs downloaded with a reported $0.65 per song royalty going to the labels that equals $650,000 in revenue. Even though it is divided by many artists, anyone can see the potential, certainly record execs that have been burned by having to compete with free (and arguably illegal) downloads. What 1 million downloads means is that people are willing to pay for music that is convenient, easy to store and better sounding than MP3.
Ken Lopez from the University of Southern California’s Thornton School of Music was one of the first to start downloading songs from iTunes4 and has begun archiving his vast CD collection on to hard drives and portable deceives like his Apple iPod. Lopez reports that the ease of downloads is fascinating and ultimately useful but he is unlikely to stop purchasing prerecorded music for a number of reasons. His CDs are his archive in the case that his hard drives fail. Another important reason Lopez is still buying prerecorded music is the development of new compression methods like AAC found on the Apple site. In listening tests with his students, Lopez reports discernable audio quality improvements with rips using the new AAC format over the same tracks using MP3 encoding. Additionally, AAC uses up half the drive space as MP3 files. Lopez is now re-ripping his collection to get better audio quality and the ability to travel with even more songs in his back pocket.
The reason people will still continue to buy prerecorded music is multi-fold but without question Apple is onto something with their service. The new audio formats (SACD and DVD-Audio) offer lots more value in surround sound, supplemental materials and better audio for the cost of a CD. People love to collect memorabilia and that is a strong part of the pride of ownership that goes into growing music collections. But the latest reason to buy prerecorded music is to keep an archive of the music that you own and love so that as portable devices and compression techniques improve, you can always have the best music with you everywhere you go.
In the end, the music business is asking Apple, Napster and other pay download sites to (much like Jerry McGuire) to “show them the money” and Apple is delivering. With revenues down and the need for a new distribution method badly needed, expect to see more and more material available on the better download sites. In fact, look to see fierce competition for rare and exclusive material that will force hardcore music fans to the pay per download sites to score songs from their favorite artists they simply can’t get anywhere else.