Feeds

iTunes: prices up, revenue down?

Talking Heads and Long Tails

High performance access to file storage

When iTunes introduced variable pricing a month ago, we discovered most of the catalog remained unchanged, with price increases for the most popular songs. Fair enough, you might think, that reflects real-world supply and demand. But has it, as expected, brought home more cash for the beleaguered labels?

Billboard and Digital Music News both carry reports suggesting otherwise.

Admittedly it's early days, and song sales are both notoriously seasonal and influenced by external factors. Billboard notes that after four weeks, both $1.29 and $0.99 songs have, as expected, experienced a decline in revenue, down 34.5 per cent and 29 per cent. But since $1.29 songs have a higher margin, the hike has raised more income than if the price had remained at 99 cents. How much? Billboard reckons $14,000 a week net. DMN confirms the trend but wonders if the net effect isn't negative overall.

There's no mention in either report of the Ella Fitzgerald effect: would price reductions on back catalog begin to shift these golden oldies? But sadly, in cold economic terms, maybe that doesn't matter very much.

Squeezing the head

And just as those half dozen expensive business seats on a flight pay for pretty much everybody else, the hits carry the rest of the catalog. This was challenged by Chris Anderson's faith-based "Long Tail" theory, which proposed that the future of digital retail was selling "less of more": higher aggregate volumes of low-selling inventory items that physical stores couldn't afford to carry.

Brown's 1956 lognormal curve fits digital sales data much better than "The Long Tail"

But Anderson picked the wrong curve: you'll recall the study last year which found that of 12m songs carried by a digital music retailer - which may or may not be iTunes itself - 9m were never downloaded even once. With his "Long Tail" well and truly bust, suppliers are now refocussed on the traditional activity of squeezing profit from the bestsellers.

As for the "tail" - petrol stations have always carried racks of budget tapes and CDs of the classics, with a unit price far lower than that commanded by the Top 10 artists of the day. The evidence suggests that bundling and promoting the back catalog isn't something the labels have quite got the hang of yet, digitally.

But perhaps we should thank Susan Boyle (an example of an overnight internet sensation) for finally putting Web 2.0's fantasy economics to rest. ®

High performance access to file storage

More from The Register

next story
Audio fans, prepare yourself for the Second Coming ... of Blu-ray
High Fidelity Pure Audio – is this what your ears have been waiting for?
Dropbox defends fantastically badly timed Condoleezza Rice appointment
'Nothing is going to change with Dr. Rice's appointment,' file sharer promises
MtGox chief Karpelès refuses to come to US for g-men's grilling
Bitcoin baron says he needs another lawyer for FinCEN chat
Did a date calculation bug just cost hard-up Co-op Bank £110m?
And just when Brit banking org needs £400m to stay afloat
Zucker punched: Google gobbles Facebook-wooed Titan Aerospace
Up, up and away in my beautiful balloon flying broadband-bot
Apple DOMINATES the Valley, rakes in more profit than Google, HP, Intel, Cisco COMBINED
Cook & Co. also pay more taxes than those four worthies PLUS eBay and Oracle
It may be ILLEGAL to run Heartbleed health checks – IT lawyer
Do the right thing, earn up to 10 years in clink
France bans managers from contacting workers outside business hours
«Email? Mais non ... il est plus tard que six heures du soir!»
prev story

Whitepapers

Mainstay ROI - Does application security pay?
In this whitepaper learn how you and your enterprise might benefit from better software security.
Five 3D headsets to be won!
We were so impressed by the Durovis Dive headset we’ve asked the company to give some away to Reg readers.
3 Big data security analytics techniques
Applying these Big Data security analytics techniques can help you make your business safer by detecting attacks early, before significant damage is done.
The benefits of software based PBX
Why you should break free from your proprietary PBX and how to leverage your existing server hardware.
Mobile application security study
Download this report to see the alarming realities regarding the sheer number of applications vulnerable to attack, as well as the most common and easily addressable vulnerability errors.