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Warner sees stalled digital music after variable iTunes

updated 11:25 am EST, Tue February 9, 2010

Warner Music admits iTunes hike premature

Warner Music Group during its fiscal results call today acknowledged that its digital music sales have slowed since it helped push for variable pricing on iTunes last year. In the fall, the company's digital sales equivalent to whole albums grew about 5 percent compared to late 2008 where it grew 10 percent over this past summer and 11 percent in the spring. Absolute digital revenue followed a similar pattern as the income grew 8 percent year-over-year in late 2009, but less than half the 20 percent from the end of 2008.

Label chief Edgar Bronfman spun the performance by contending that online music is now a developed market and that the rapid growth from the past was because of its new state. The executive nonetheless admitted that insisting on the changes, which made per-track downloads as high as $1.29 on both Apple's store as well as Amazon and Walmart, was likely a dangerous move given a recession where luxury purchases are already liable to drop.

Major studios in recent years have insisted that variable pricing was necessary as an insistence on flat-rate pricing by Apple was gutting its revenues. Since customers were no longer obliged to buy full albums when they only want one or two key tracks, flat-rate pricing may have "punished" Warner and others by giving them no extra compensation from those listeners. They also argued that they could cut prices on back-catalog songs and spur sales of older titles.

Bronfman went so far as to express jealousy over practices by e-book publishers, which have successfully pushed their prices higher despite having a considerably younger market. The pricing for the iBookstore and the iPad is believed to be higher than for the Kindle, but is consequently a weapon for Apple as it can attract publishers worried over being locked into $10 or lower prices.

"It's interesting that the book publishing industry, on the iPad, has much more flexibility than the music industry had," he observed. [via MediaMemo]



By Electronista Staff
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Comments

  1. Bobfozz

    Fresh-Faced Recruit

    Joined: Jul 2008

    +7

    that's because...

    the music industry had no flexibility and it sounds like it has learned its lessons too late. Some are trying to compare the publishing industry to the music industry in terms of pirating, There is no comparison--remember the meaning of apple to oranges?

    Every day we have "expert" opinions pushed in front of our faces by the news media. Realistically, when you invest YOUR own money and your own time, you become an expert a whole lot faster.

  1. cmoney

    Mac Enthusiast

    Joined: Sep 2000

    +15

    Oops I Did It Again

    The music industry does one thing well: finding new ways to $crew itself.

  1. jmonty12

    Fresh-Faced Recruit

    Joined: Jun 2003

    +22

    Good luck finding songs under $0.99

    All that garbage about making older songs as cheap as $0.69. What a farce. You have to look VERY hard to find anything under $0.99, and more and more songs are stuck at $1.29. How can slower sales be a surprise here?

  1. climacs

    Junior Member

    Joined: Sep 2001

    +17

    morons

    they haven't learned a damned thing in the 10 years since Napster.

  1. rvhernandez

    Fresh-Faced Recruit

    Joined: Apr 2005

    +19

    Duh!

    0.99 = No hesitation
    1.29 = Really? Maybe not... Not that $0.30 is a large amount, I think it's a mental thing. Like, why is this $0.30 more? What am I getting for it vs. other songs at $0.99?

    I agree with the post above. There is a bunch of older music for $1.29. So much for the music industry's promise of older = cheaper.

    Don't believe me? Look at U2's Joshua Tree. How much more money do they need to milk from this 20+ year old LP? I'm sure they've already covered the production costs...

  1. jaysones

    Junior Member

    Joined: Nov 1999

    +7

    comment title

    So I guess they're going back to a flat 99 cent rate, right? No? No lesson learned at all?

  1. ClevelandAdv

    Fresh-Faced Recruit

    Joined: Jul 2004

    +8

    Music industry = morons

    Why do the continue to try to kill their own business time and time again.
    A 30% increase in the cost of most tracks and a few low-cost oldies just turn off consumers.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -8

    Yet...

    Isn't this the whole point of a 'free' market and capitalism. Those with the product can price it at the point they want, and the consumer can decide whether or not to buy, rather than having the 'middleman' fix an arbitrary price on the seller?

    And I bet when McMillan announces they sold less ebooks over the current quarter than before, you'll be saying the same thing: Should have let amazon set your prices rather than demanding what you want! Oh, right, that was amazon trying to keep prices down. That's something we can't have.

  1. testudo

    Forum Regular

    Joined: Aug 2001

    -7

    But...

    This whole article is missing the point. As their statement reads:

    • Total revenue of $918 million increased 3% from the prior-year quarter, and declined 2% on a constant-currency basis.

    So, while digital sales 'stalled' at 5% over last year and flat from last quarter, that is still better than what their non-digital part did, which saw declines in both.

    And, of course, there are other factors that could talk to this, such as having really crappy artists, no decent releases, the masses wising up and realizing all music is just the same c*** it has been over the last 10 years, so why bother buying the newest garbage when you can just listen to last year's garbage.

  1. ricardogf

    Fresh-Faced Recruit

    Joined: Jan 2003

    0

    ADL

    So BronfMAN, why not join the Anti-Defamation League instead of continuing your lousy job at Warner? At least there you're gonna be better able to distribute diatribes against specific groups, instead of attacking Apple for its avant-garde practices.

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