It Will Take Another iPod Moment To Restart The Digital Music Market - hypebot

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Roger Bixley

Wouldn't the decline in iPod sales correspond with the increase in iPhone sales, since every iPhone is a de facto iPod? Consumers don't need a separate music player when they already carry around their telephone.

Iain Woolward

Roger: Good point; entirely logical. What I don't 'get' is why there's little good information on total digital rev/profit across all devices (your point) across the competing 'ecosystems' (Apple, Google, Amazon, MSFT & Barnes & Noble). The market says it's OK for Amazon to have basically no margin on its 'razors', for which it will sell a bizillion 'blades' in upcoming years, but Apple gets hammered if device margins drop a few points below 35%. Isn't it time the market started at least discussing this 'razor blade' environment in a logical way (again, your point), if not actually projecting its value?
Regards,
Iain

Jcouper

That graph makes me angry. Correlation does not equal causation. Its totally meaningless, what it actually shows is that the desire to buy digital music made people buy the more popular MP3 player on the market. What drivel.

Mark Mulligan

Dear J - you have the correlation in reverse - people bought downloads because of the MP3 player not the other way round. There was no download market to talk of before the iPod. Apple effectively created the market for paid downloads. press play, MusicNet and OD2 had tried and failed.

There is more than simply correlation, there is direct correlation. I've been deep diving into these numbers for well over a decade, both the consumer data and the sales data and I know this to be true from the datasets.

Apple account for 75% of music download sales in the US and close to 50% of all digital music revenues globally (i.e. even factoring in items like ringtones). Thus the behavior of Apple customers directly shapes the digital music market more broadly.

If you look at the buying behaviors of Apple device customers now compared to 5 years ago you will see a massive diversification in spending to other content categories such as games, apps and video.

But most importantly there is a very marked slow down in number of new iTunes music buying customers.

I have pages and pages of data and modeling that underpins this chart. I can assure you that this is true causal correlation.

If you have any data evidence which suggests the contrary then I would be delighted for you to share it with me.

Kind regards

Mark

Jcouper

The iPod was reactionary. You think Apple invented it in a vacuum?
The iTunes music store was launched in 2003 but the first iPod came out in 2001. Apple were a long way off the first MP3 player manufacturer also, the first mass produced player was released in 1997. Archos and Creative both got there first.
The first big MP3 store was launched in 1998 and called Ritmoteca. It sold tracks for 99c or alvums for 9.99 and had all the majors on board. emusic also launched that year, Rhapsody in 2001.
To say that the iPod is the reason for digital music's sucess is disingenuoous and blatently wrong. You want a reason MP3 sales took off look at file sharing and the realisation that you dont need a physical record collection.
Also, what logic is it that MP3 sales would tail off now that everyone has an mp3 player built into their phone? Its a stupid argument. You saw a correlation and you determinned a cause from that and thats not how it works.

Jcouper

The other thing that this article assumes ids that more MP3 sales are good. A far more compelling argument is that those sales were canibalising the existing CD sales which were much more profitable.
You could extend this argument that in looking for the next big thing which may or may not be streaming services, we're making the same mistake again.
Or whatever, graph goes up or something.

LiquidVerb

Jcouper owned it.

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