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]