October 03, 2005
Legal Music Downloads Grow 350% in Revenue
Online legal music downloads grew 350% to $790 million in the first half of 2005 compared to the first half of 2004. CD sales actually fell 6.7% in revenue to $13.2 billion.iTunes captured about 80% of digital music revenue market-share. It's going to be a battle royale between Apple and the record labels as the pricing contracts come up for renewal at the end of this year. Apple wants to keep pricing fixed at 99c per song, while the music industry wants to be able to charge more or less depending on demand.
Let's not kid ourselves folks, even though the music labels tell us they want to reduce pricing on certain songs, they basically want to RAISE prices. Apple's argument is if you raise prices over 99c, people will simply go back to pirating music.
Catch-22 as Apple dominates the industry with the iPod and iTunes exclusive combination. However Apple would like to sell music too. Then again if you're music label, would you want to dump the only rapidly growing distribution channel that has 80-90% market-share? Probably not. Steve Jobs, don't budge. Stare them down. Show them who is boss.
