Monday, March 3, 2008

Why itunes Is Winning

With the announcement last week that itunes has become the #2 retail outlet for music (trailing only behind Walmart), it's time to concede that not only is the digital download growing in popularity as the CD wanes, but that consumers have latched onto the conveniences associated with the downloadable file and there will be no turning back.

On Christmas day 2007, a day when Walmart and other physical (non-virtual) CD retailers do no business at all, itunes sold 20,000,000 downloads. This clearly illustrates why the CD can no longer compete.

For the consumer, music is a leisure component that has become integrated into all aspects of daily life in proportion to it's availability, portability, cost effective delivery system, and individually tailored storage and playback options.

When Sony introduced the Discman, it was the combination of the disk and it's playback system that caused CD sales to explode. For the first time it was possible to travel away from home or car based playback systems and still have a high quality listening experience. With a photo-holder sized carrying case and a slender Discman the consumer could be an audiophile and take a scenic bike ride through the park at the same time. The novelty of this freedom was a heady experience at first, and sales reflected this enthusiasm. Consumers preferred CDs not for superior sound quality alone, but for the combination of quality and portability. The ipod and iphone have done the same thing for the portable file.

It's clear also that music is often an impulse buy. I remember as a kid getting that Christmas money and being frustrated because the record store was closed. Last Christmas the itunes Gift Card made a lot of young people very happy instead of very frustrated. That's why 20,000,000 songs were downloaded. Send a kid to the mall with $20 and he'll spend $6 on food and buy one CD. Send him to itunes with a $20 gift card and he'll download 20 songs. It's that simple.

Last week I did a concert/seminar at the Kimberton Waldorf School here in Chester County, PA. In speaking to the large group of mixed-graders I asked them where they got their music. I received an instantaneous and unanimous answer "itunes!"

But this is not, as some would have it, an age related shift in buying habits.
A recent study determined that 80% of all surveyed adults hadn't purchased a single CD in 2007. Young and old alike prefer the advantages of the digital download over the CD.

What the record industry should be doing instead of whining about loss of profits, is to come up with upgrades that reflect the consumer's preferences. We can predict what they will want : 1) higher quality file formats at retail, 2) easier and more convenient downloading options and payment options, 3) more reliable storage and back-up, such as a form of download that allows buyers to re-access a lost file without re-purchasing the song, 4) more customizable playback options such as built in re-mix capabilities and files that convert themselves to various formats at the click of a mouse.

If the record industry wants to keep it's share of the consumer's purchasing power it must compete in the open market with those who have seized the innovation initiative that the record (read "CD") industry failed to seize at the outset of the downloading revolution. Instead of greedily protecting their obsolete interests and suing grandmothers, they should have welcomed the opportunity to bring in 20,000,000 downloads on Christmas day.

copyright 2008 by craig bickhardt


Anonymous said...

Great post! And honestly, I think Itunes has won already. And Napster's brilliant but slow to be adopted idea of having a monthly subscription fee for anything loaded on a"player" and not burned to CD is also a shot across the bow to the traditional model.

I welcome most of this change but am saddened that the art of the album cover will be left behind. One of the great joys of my teen years was sitting with those amazing covers of the 60's and 70's while the music played learning the names of every player on the record.

In a download universe, I'm afraid that both art and the musical contributers will be left behind

chromehead said...

Thanks Nathan. Yes, like old rodeo posters and tobacco baseball cards, LP art was a collectible thing by itself. I will miss it if it vanishes. I wonder, though, if it's really going to disappear entirely. With the re-emergence of the new 180 gram vinyl LP, there's still a reason for many popular artists to pay for artwork and liner note costs. Maybe this will be a multi-tier type of thing, too. Maybe there will be artists and bands who opt for minimal graphics, while others, who can afford it or value it, will still go the expense of creating good 180 gram jackets and such.

In either case, the consumer will probably dictate the outcome.

Tim Wheeler said...

Excellent take, as always.

Itunes is winning because it got there first with a complete solution that includes:

1. Software that works and is easy to understand.
2. Hardware (ipod) that.. ahem.. works and is easy to understand... and plays mp3’s as well as DRM tracks.
3. Content. (and the agreements necessary to do provide it.)

One thing that doesn't seem to make the transitional journey to is the complete package.. the intended project that the artist created.

This is the thing I miss the most.

The songwriter might see a song as a complete package, but I think the artist sees the whole recording project as the package. ( a chunk of their creative life / a phase they were going through ) The album art is part of this, as well.

The current digital sales model doesn't succeed in preserving this part of the artistic process, and as the resulting sales results dictate, the process is forced to change; pragmatically trying to create tracks that will sell individually.

While the single song sale is a necessary element, the calculated 'sure-thing' nature of single selection (and creation) seems to dilute the art. How do you preserve art while clinically removing risk.

I’m at a loss when it comes to ideas that would change this trend, except to say that it is naive to think that you can sell a collection of songs for close to the value of the sum of the individual tracks. The consumer is smarter than that, and has answered with his pocketbook.

Try to imagine another YELLOW BRICK ROAD, or SONGS IN THE KEY OF LIFE in the current digital model. Easy to imagine an artist creating it.. but marketing and selling it? How would that look in an iTunes-only world. Would LOVE LIES BLEEDING sell separately from FUNERAL FOR A FRIEND? Would the songs on those albums.. the ones that ring in our heads, but never got airplay... would they even have been heard?

iTunes will be number one in the new model, but is it because they're delivering what the consumer wants, or is it because they're the closest, so far?

chromehead said...

I agree Tim, it's a problem that hasn't been addressed by many artists. There were (are?) a few attempts to force consumers to buy a whole project by disabling the individual song download option. Judging by discussion board comments this has been an unpopular experiment.

There are still a few artists doing concept records (Sufjan Stevens, Decemberists, etc.) so I don't think everyone has conceded that the situation is hopeless. I'll stick my neck out and say that I believe the consumer is smart enough to determine whether a record like Yellow Brick Road or Astral Weeks needs to be listened to as a whole rather than in fragments. Let's hope so anyway. Meanwhile, I think we'd all agree that most records contain only a few good songs and we've always made our own "mix tapes" even when we bought the whole LP. All that's been eliminated in most cases is twenty minutes of boredom. But where I agree with you is on the point of how this affects the "mindset" of artists and labels, who no longer see themselves as working on the large canvas.

Anonymous said... nailed it.

Mike Clark said...

I'm not so sure today's artists - outside of the few mentioned - as well as Springsteen and some other 'classic' artists - think in terms of 'large canvas.' I think art flows as the audience for art flows. Yes, some artists - Beatles, anyone? - create the landscape and romp within it, but most artists aren't reinventing something, they're working within the confines of audience demand.

What I think is happening is that 'we' - and yes, I do include myself as one who misses the entire package - are not on the forefront of art anymore. We aren't the audience, and we can lament the passing of our era as long as we have breath, but that's the way it is.

Today's artists work faster, cheaper and think in terms of music and video - non-static forms of expression. They think in html and compression rates instead of bass response and groove constraints. (Remember Todd Rundgren's envelope-pushing in the '70s to include more music per side on an LP? I don't pretend to understand how the technology of the groove.)

I think the difficulty for our generation is that we tend to think of LPs as being a creation of the 1970s; even in 1969 half of the LPs (don't hold me to the stat, its for arguement sake and there's no way to know for sure) were pure product, with VERY little input from the artist in the cover design, etc. - with even writers' credits omitted. And in the punk era, I wonder how many of the artists cared about packaging?

Times change - we change with them. I love the ease of mp3s. I like the fact I can burn a CD, use and abuse it, and still have the original mp3 - or album -stored for future use. I seldom play original CDs, and I digitize new ones and file the original - with its cover art - away. And I don't miss the LPs (sans cover art) one little bit; every time I play one and find a new pop or skip I run safely back into the arms of pristine compressed digital media. After all, every form of reproduction has its own limitations - remember 8-tracks? Cassette hiss? Reel-to-reel tape breakage? Black and white TV?

Just think - there will come a day when today's current 16-year-olds will miss visiting websites, downloading tracks and submerging themselves into the entire html experience; implants will have replaced the visual, auditory experiences with Lord only knows what ...

chromehead said...

Thanks for your comments Mike.

It's interesting to note the affinity among today's youth for artists of our generation. When I did the Waldorf School seminar I asked the teens who their favorite artists were. The answers : Bob Marley, Neil Young, Dylan, Beatles, Nirvana, etc. I prompted them again for their favorite artists of their generation and they gave no answers (literally NONE).

The disconnect was surprising, but it seems to indicate that their perception is similar to ours. Artists may be too concerned with immediate results and less concerned with creating lasting art that speaks to the audience across the barriers of time.