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The Legal Digital Download Upside
November 25, 2005
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"A lot of companies have chosen to downsize, and maybe that was the right thing for them. We chose a different path. Our belief was that if we kept putting great products in front of customers, they would continue to open their wallets." -- Apple Head, Steve Jobs
This week the leading sales and marketing research company, the NPD Group, released information that ranks Apple's iTunes music store as a Top-10 music retailer. (See lead news story below, ' iTunes Outsells Traditional Music Stores' )
"Taking their growth and others' pain, it's not inconceivable to see them cracking into higher ground in the foreseeable future," said NPD music and movies industry analyst Russ Crupnick.
This of course is good news not only for Apple, but for all in the industry who want to see consumers buy music rather than steal it online. iTunes in England has already captured fifty-four percent of the online business there, and iTunes in Japan is showing monthly increases in purchases as well. ( As reported here in the newsletter three weeks ago, Apple also reported over one million video download sales in just 19 days after making them available! )
While some in the music industry still might not like the iTunes model and pricing, the fact is that iTunes is SELLING music in big quantities and consumers are responding not only here but overseas as well. I am of the opinion that ANYTHING that gets people to buy music instead of stealing it, is a step in the right direction.
I don't expect too may music industry leaders to come out in the media and praise Mr. Jobs, but he's certainly helped turn the illegal download ship around in midstream and head it in a more positive direction. iTunes has also encouraged others to bring music stores online and though digital sales only accounted for slightly more than 4 percent of the market during the first half of 2005, that's up from about 1.5 percent during the first half of 2004. That's a rather significant increase and one of the only positive ones the music industry can point to as CD sales continue to decline.
I've said many times previously here in the newsletter that illegal P2P file-sharing cannot and will not ever be eliminated completely despite the best efforts of the RIAA. Digital technology keeps changing by the second and as it advances it simply makes it impossible to turn back time. But iTunes and Apple have shown that there's plenty of money to be made online with the right pricing for consumers. (Again, for those who don't like Apple's pricing, I ask you to ask the artists who've sold product on iTunes if they like getting their checks )
Then there's the argument put forth by several industry leaders about Apple's iTunes merely being a vehicle to sell iPods. If that was the intention, so what? Online music sales are still increasing rapidly and the iPod is synonymous with portable music. So was the 'Walkman.'
iTunes was one giant step for Apple, but it was also one giant leap for the entire music industry.
iTunes Outsells Traditional Music Stores
Apple Computer's iTunes music store now sells more music than Tower Records or Borders, according to analyst firm the NPD Group. The research company tracks downloads from digital music stores, as well as people's purchasing habits at offline retail stores. During the past three months, iTunes made it to the U.S. Top 10 sales list for the first time, NPD said.
Read more about it by clicking here.
55 Million Satellite Radios By 2010
The U.S. market for digital satellite radio will increase at a compound annual growth rate of 35 percent, pushing up the installed base of receiving devices to 55 million units in 2010, from the current 12 million, according to a Jupiter Research study released Tuesday.
Read more about it by clicking here.
Warner Music To Pay $5 Million In "payola" Probe
NEW YORK--Warner Music Group, one of the largest U.S. record companies, will pay $5 million to settle a New York state probe into how it influenced which songs are played on the radio, New York State Attorney General Eliot Spitzer said on Tuesday.
The probe involved "pay-for-play" practices, commonly known as "payola," in which companies are accused of paying radio stations or promoters to secure air time for songs.
Read more about it by clicking here.
Sony BMG Sued Over CD's With Anti-Piracy Software
In separate legal actions this week, the Electronic Frontier Foundation, an influential digital rights advocacy group in California, and the Texas attorney general filed lawsuits against the music publisher Sony BMG, contending that the company violated consumers' rights and traded in malicious software.
Read more about it by clicking here.
Sony 0ffers New CDs, MP3s For Recalled Discs
Sony BMG Music Entertainment released details Friday of a virtually unprecedented CD recall program that will allow music buyers to exchange recently purchased CDs with copy protection for new discs and MP3s.
The company is responding to widespread security worries over copy protection technology contained on 52 albums released over the last year. When put in a Windows-based computer's CD player, the discs install antipiracy technology on a hard drive that exposes the PC to the risk of viruses and other hacker attacks.
Read more about it by clicking here.
ATTENTION ALL SINGLE, RICH, GOOD LOOKING MEN
Jessica Simpson and Nick Lachey announcing that they are separating after three years of marriage. "This is the mutual decision of two people with an enormous amount of respect and admiration for each other," they say in a joint statement.
AMA AWARD WINNERS
Green Day, Destiny's Child, the Black Eyed Peas, Tim McGraw and Kelly Clarkson all picking up two awards apiece at the 33rd Annual American Music Awards last Tuesday night. Mariah Carey, who was nominated in four categories, winning the prize for Favorite Female Soul/R&B Artist.
PASSING
Singer-songwriter Chris Whitley, who played everything from blues to alt-rock, died Sunday of lung cancer in Houston, according to a message posted on his Website by his family. He was 45.
COMING SOON!
- Shakira, Oral Fixation Vol. 2 (11/29)
- INXS, Switch (11/29)
- The Darkness, One Way Ticket to Hell ... and Back (11/29)
- Dave Matthews Band, Weekend on the Rocks (11/29)
- T.A.T.U., Dangerous & Moving (11/29)
2005 Industry Conferences
Date Name Location 2005 Digital Entertainment & Media Expo (DEMXPO) November 30th, December 1st Los Angeles, CA International CES January 5-8, 2006 Las Vegas. NV
Quotes of the week
" Michael Jackson is moving to the Persian Gulf. This week he was over there and caused a riot when he went into the wrong restroom. In Michael's defense, in his case I'm not sure if there is a right restroom. "
-- David Letterman, on Michael Jackson's using a Ladies restroom in a mall in Dubai." Last week on CBS they had the Country Music Awards. These are like the Vibe Awards for white people. "
-- Jay Leno" The new "Harry Potter" movie is out. It made $100 million over the weekend. I believe this is the most money made by a teenage boy without suing Michael Jackson. "
-- David Letterman
NARIP Information
NARIP (The National Association of Record Industry Professionals) promotes career advancement, education and good will among record executives. To find out more about this great organization, how you can join or attend their events, just go to: www.narip.com.Upcoming Events
NARIP Holiday Cocktail Mixer in NEW YORK
December 06, 2005, http://www.narip.com/index.php?page=events&id=19.
The B-Side - 'Blips'
WHAT THE HELL, WE'LL JUST BUILD ANOTHER ONE: EUGENE, Ore. -- Construction workers using a deep-fryer to cook an early Thanksgiving dinner committed the ultimate no-no. They used the fryer in the garage of a vacant house they had just built in Eugene, Ore. It's an annual tradition by the crew, but the workers said the oil inside got too hot. Flames spread through the garage and up the front of the house, into a second-story room. Firefighters said the blaze caused about $75,000 in damage. Undaunted, the workers bought a second bird and cooked it in the back yard of a house across the street.
MOST POPULAR E-CARD EVER: CLEVELAND -- Gloria Gaynor's disco anthem "I Will Survive" has become a smash hit all over again for American Greetings. But it's a cartoon turkey with an Afro that sings and dances to a Thanksgiving version of the song. The company said it's become its most popular electronic greeting card ever. (Click here to see the disco turkey.) American Greetings said more than 30 million computer users have seen the e-card so far this month. It was viewed more than 2 million times Tuesday alone, after the card was featured on "Good Morning America" and in USA Today.
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