Feeds

iTunes: prices up, revenue down?

Talking Heads and Long Tails

Security for virtualized datacentres

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. ®

Reducing the cost and complexity of web vulnerability management

More from The Register

next story
Phones 4u slips into administration after EE cuts ties with Brit mobe retailer
More than 5,500 jobs could be axed if rescue mission fails
JINGS! Microsoft Bing called Scots indyref RIGHT!
Redmond sporran metrics get one in the ten ring
Driving with an Apple Watch could land you with a £100 FINE
Bad news for tech-addicted fanbois behind the wheel
Murdoch to Europe: Inflict MORE PAIN on Google, please
'Platform for piracy' must be punished, or it'll kill us in FIVE YEARS
Phones 4u website DIES as wounded mobe retailer struggles to stay above water
Founder blames 'ruthless network partners' for implosion
Found inside ISIS terror chap's laptop: CELINE DION tunes
REPORT: Stash of terrorist material found in Syria Dell box
Sony says year's losses will be FOUR TIMES DEEPER than thought
Losses of more than $2 BILLION loom over troubled Japanese corp
prev story

Whitepapers

Providing a secure and efficient Helpdesk
A single remote control platform for user support is be key to providing an efficient helpdesk. Retain full control over the way in which screen and keystroke data is transmitted.
WIN a very cool portable ZX Spectrum
Win a one-off portable Spectrum built by legendary hardware hacker Ben Heck
Saudi Petroleum chooses Tegile storage solution
A storage solution that addresses company growth and performance for business-critical applications of caseware archive and search along with other key operational systems.
Protecting users from Firesheep and other Sidejacking attacks with SSL
Discussing the vulnerabilities inherent in Wi-Fi networks, and how using TLS/SSL for your entire site will assure security.
Security for virtualized datacentres
Legacy security solutions are inefficient due to the architectural differences between physical and virtual environments.