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iTunes Store becomes second biggest music retailer

Posted by aubin on Tuesday, February 26, 2008 at 12:30 PM (EST)

According to a Reuters report, Apple's iTunes Music Store is now the second largest music retailer in the United States. The statistic is particularly notable since the retailer category includes both physical and digital media, with only Walmart's physical CDs coming ahead of iTunes.

Based on 2007 sales, legal music downloads now account for 10 percent of music acquired in the United States, but the increase failed to offset a decline in physical CD sales. The amount of music purchased by consumers rose 6 percent from a surge in digital music sales. But actual spending rates across the industry declined by 10 percent due to lackluster CD sales, dropping from about $44 per capita to $40 among Internet users.

The iTunes Store now has more than 50 million customers and has sold a total of 4 billion songs.

Games and Technology (96 comments)

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Fine Print: The following comments are owned by whoever posted them. We are not responsible for them in any way. Seriously.

baldsteve (February 26, 2008)

Fuck you Itunes for Soulja Boy

2+ Replies

MattRamone (February 26, 2008)

Are kids really that dumb?

baldsteve (February 26, 2008)

Even dumber. Check out the paper today, the results of a poll of High School kids, 70% didn't know when the Civil War was.

MattRamone (February 26, 2008)

How close did they want? Exact years, decade, half century, or century?

Regardless, that's shameful.

baldsteve (February 26, 2008)

If I remember the stats properly they couldn't get it within 50 years. For a country as young as ours that is reprehensible

kneel (February 26, 2008)

its reprehensible to call it a 'civil war'

that shit was the war of northern aggression.

fallingupwards84 (February 26, 2008)

lolz

although technically it should be the "war for southern independence"

ibitchslappedyourmama (February 26, 2008)

Hahaha, shut the fuck up.
The South should just try to secede again

fallingupwards84 (February 26, 2008)

this time, though, lets just allow them to secede so our country will stop electing backward fundamentalist politicians

kneel (February 26, 2008)

thats not so much of a 'north vs south' problem, its more of a 'rural vs urban' issue.

look at the vote distribution on a county scale, and you'll see pockets of dark blue around most urban areas in the south.

fallingupwards84 (February 26, 2008)

true, i live in Charlotte NC and our county voted Kerry in '04 and Gore in '00

MattRamone (February 26, 2008)

Maybe they just got confused and thought the question was about the new Dillinger Four. No one knows when that shit's coming out.

LookBackAndLaugh (February 26, 2008)

There was a Civil War?

baldsteve (February 26, 2008)

Yeah, Iron Man and the Fascists won, Spider-Man showed his face then everybody forgot and Captain America is dead. It's pretty long and drawn out, wait for the trade paper back

Guy_Incognito (February 26, 2008)

Holy crap...these kids are going to vote in a few years!

The Civil War wasn't even that long ago for crying out loud. There are still a PLENTY of people alive today who knew people that fought in that war. The last Union civil war veteran died in 1956...I shit you not.

telegraphrocks (February 26, 2008)

"with only Walmart's physical CDs coming ahead of iTunes."

---------------------------

Seriously!?!?!?!?!?!? !?!?!?!?

That many country fans buy albums from Wal-Mart?

That's fuckin' nutty!

6+ Replies

baldsteve (February 26, 2008)

You forget, it's not just country fans, it's anybody that wants an edited version of a record or that lives in a town that Wal-Mart destroyed...literally the only place to purchase cd's...other than those Gas Station compilations

MattRamone (February 26, 2008)

Man, are you knocking $4 Merle Haggard comps?

baldsteve (February 26, 2008)

Dude, I don't fuck with Merle, or he'll fuck with me. I would NEVER talk shit about the classic country dudes. I love them.

ArtieFufkin (February 26, 2008)

lol - oh man, the gas station comps! when I was about 20 on a road trip to San Diego (from SF) we had very few CD's with us so we bought a few of these gems. to this day I can't listen to a Bachman Turner Overdrive or Foghat song!

LinoleumMagazine (February 26, 2008)

I saw the new live NOFX cd at Wal-Mart. I had to do a double take, but it was there and didn't look like it was censored either.

hanny (February 26, 2008)

don't forget your hannah montana sales.

Guy_Incognito (February 26, 2008)

Ahh yes, what a bunch of lemmings we've become. Buying CDs from the very company that makes it's money by enslaving chinese, destroying main street, and exporting jobs to authoritarian states...awesome.

It's all about getting the best price right!?

Tobin_Ownlife (February 26, 2008)

Oh what's that you say? CD's are in fact still selling? Because that's what I got out of that article. You know what this means right? Simply put, labels and bands need to lower CD prices. You can sell a CD for $8 (roughly wal marts price, sometimes cheaper) and still make like $5-$7 profit. It's that simple. More will buy physical merch for cheaper prices, or less will buy it for higher prices. Take your pick, but I think you will find that you gain more appreciation from keeping fair prices. You don't have to break yourself by getting 1000 CD's made. There are other very affordable options. Comments or feedback? I run a label so I would like to hear anything you have to say.

14+ Replies

Banal242 (February 26, 2008)

I agree CDs need to be cheaper but I think one of the reasons Wal-mart does it so cheap isn't because they are willing to take less of a cut. It has to go with the fact that they control most of the distribution.

MattRamone (February 26, 2008)

Plus, CDs are a loss leader. Unlike small indie labels who depend on CD profit to survive, Wal Mart sells stuff like CDs dirt cheap in order to draw you in the store so that you might buy a big ticket item like a TV or a dryer.

baldsteve (February 26, 2008)

Only at Wal-Mart would you go in for a cd and leave with a TV and a Dryer.

veganboyjosh (February 26, 2008)

i dunno. have you ever been to arik victor's house?

i could see leaving that place with some furniture or something...

MattRamone (February 26, 2008)

What I got out of it really was that Wal Mart sells records in places and regions where people may not have access to high speed internet, or its use may not be as prevalent due to cultural or economic concerns.

I think the people who really care about the tactile object purchase the vinyl, while those who just want the songs ultimately will go digital.

Wentz_Equals_Death (February 26, 2008)

vinyl + digital downloads + good music = my business

i also buy tons of CDs, so, uh, keep making stuff.

i think what really matters though (obviously? perhaps not these days) is the quality of the music. people have been trained to download and treat music as disposable because it is. i'd prefer a label release 4 great albums a year than 50 mediocre or generic ones.

in the end though, who judges what's great and what's generic? that becomes a blurry line and i think it boils down to the label's decision. if the label gives a shit about the tunes, the packaging, the whole art of it, i think we'll all be okay.

The4footpartysub (February 26, 2008)

what i'd like to see more is the vinyl releases that come with the free digital download. those are the best deals. like when i buy cd's, i just put them right onto my computer and never play the cd again, but i still like to have a physical copy for my collection.

vinyl is just better because of the sound, bigger artwork and it's usually cheaper than cd's.

Tobin_Ownlife (February 26, 2008)

Vinyl is great, but the problem is it takes a lot of money and work to manufacture it. It's hard to put so much time into something you are not sure anyone will want. Which is why CD's are just easier, and a bit more comfortable to work with for small labels. I hope my first trip into vinyl sales works out alright.

The4footpartysub (February 26, 2008)

Very good point. I wasn't really thinking from a label standpoint...

I really hope everything works out for you.

Tobin_Ownlife (February 26, 2008)

I don't object at all to what you are saying though.

655321 (February 26, 2008)

I'll be completely honest - I've gone digital and worse yet, I get a lot of my music illegally. I'm not gonna try to justify it - it's wrong. I do buy cds on occassion simply because I want to support the band or at least allow the label to recognize that someone is buying the bands album. Also, I live in a small apartment, so trying to keep cd's around and organized would be inconvenient. However, since dl'ing music started, I have always said that if cds were $8 I would buy just about every one. at such a reasonable price I don't have to worry about getting sued, I get to support the band, and I get some sort of physical item (which will probably end up in my parents' garage after ripping it). Lower the prices!

Tobin_Ownlife (February 26, 2008)

Thanks guys. It's good to see some feedback. I also love the idea of vinyl and digital packages. I am trying to do one with the Echoes/Sleeper Horse split but Haven't quite figured the best way to do it. I was thinking maybe some kind of donation based download. Free for those who got the 7", hopefully a few bucks for those that didn't. It's just so hard to rely on people for support like that.

fallingupwards84 (February 26, 2008)

there's absolutely no way an album only costs one dollar to make... there's a whole lot more behind it than the cost of the physical cd, you're paying for production costs, advertising, among other things

Tobin_Ownlife (February 26, 2008)

I'm not speaking on terms of huge advertising campaigns. I think those are quite unnecessary and most truly independent labels can't really afford that stuff. Web ad prices are astronomical considering you are paying to have a little image flash on the side of a website that no one is going to pay attention to. Getting front page advertising for myspace and purevolume is hundreds of dollars. If you are paying more than a couple bucks to have your CD's made you are probably being ripped off, or you are not willing to do some of it yourself. Simply networking with bands and friends out of town and using word of mouth can yield a very nice response and that costs nothing. I realize my ideas are kind of based on DIY ethics, so that pigeon holes it a bit.

fallingupwards84 (February 26, 2008)

are you sure it only costs a few hundred dollars for front page advertising on myspace? that cant be true

and i know you're approaching it from a DIY perspective, but how many DIY cds are being sold at Walmart?

Tobin_Ownlife (February 26, 2008)

I guess myspace might be different. I have never seen a full breakdown of what myspace charges for advertising. I guess if purevolume is hundreds, myspace could be way more. To answer your question, none. I was using it more for a price comparison. You can put CD's out for very cheap, and still get profit. I understand some bands need more money than others, I have no plans of making a career out of music for I think it's a bit unrealistic.

Guy_Incognito (February 26, 2008)

Just to be clear, I'm not disagreeing with or even addressing the point about lowering CD prices.

But to say you can make $5$7 on an $8 CD is...well I just don't get how you are doing that math if you truly run a legitimately label and not just some garage label burning their local bands basement recordings onto CDrs and spending $50 for stickers and a website.

Show some numbers and include the cost of recording, marketing, duplication, distribution costs and retail markup.

Our MSRP is $13.98 on all of our albums and we are lucky to make $3 per album after ALL is said and done and paid for. Hey, if you got a better way, by all means fill me in.

I understand your point, but It's never as simple as you are making it out to be.

MattRamone (February 26, 2008)

What's your label?

Guy_Incognito (February 26, 2008)

Haha, there's a pretty good reason I post under "Guy_Incognito".

I've got alot of controversial opinions and I love to debate them. I'm not going to drag my bands into that. The label is strictly about putting out music we love and I'm not going to my personal politics into it at everyone else's expense.

Tobin_Ownlife (February 26, 2008)

I didn't mean to make running a label sound easy. All indie labels run on different levels. I have been fortunate enough so far to work with bands that already have recorded music or record on their own for cheap. I will use a compilation I had mass produced as an example. 1000 were made at roughly $1.37 each. I sell them for $5. I stopped using interpunk and a couple other online distributers because, well, they fuck me over. I sell stuff myself, and will sell wholesale for $2.50-$3 to anyone that needs it, including the bands. I try to distribute CD's on tour. I use a lot of word of mouth promotion. I do get buttons, stickers, and what not. but for cheap and never more than I will need. I can't really say what I spend on promotion because most of it comes out of my pocket when I get a fresh paycheck from my day job. I would say you probably have a lot more experien

show rest of comment

Guy_Incognito (February 26, 2008)

Fair enough for sure. I've definitely been at your level before and it ain't easy so I give you a ton of credit.

I'm just throwing out my perspective on it. My original assumptions about the business are similar to yours right now so I feel where you are coming from. Things change over time and eventually you get to a point where you want to do more for your bands.

For instance, when we started we charged $8 for a CD with free shipping through our little mail order business. Of course, the flipside was that we couldn't afford to do anything for our bands other than makes some stickers and posters.

Now we actually get to do some cool things like make music videos and spend a bunch of money to get our bands in big magazines and music sites. The downside is we have to charge a higher price for a CD to get that done. But

show rest of commentFair enough for sure. I've definitely been at your level before and it ain't easy so I give you a ton of credit.

I'm just throwing out my perspective on it. My original assumptions about the business are similar to yours right now so I feel where you are coming from. Things change over time and eventually you get to a point where you want to do more for your bands.

For instance, when we started we charged $8 for a CD with free shipping through our little mail order business. Of course, the flipside was that we couldn't afford to do anything for our bands other than makes some stickers and posters.

Now we actually get to do some cool things like make music videos and spend a bunch of money to get our bands in big magazines and music sites. The downside is we have to charge a higher price for a CD to get that done. But it gets people in the door to see our bands so they can eat too.

I definitely wouldn't argue with cheaper prices for digital downloads like $6 for an album or something like that. But for that to be feasible, consumers would have to do their part and actually pay for music again. I don't think people who download pirated music are going to change their habits just because iTunes went from $10 for an album to $6 though. People can pay lipservice to it, but at the end of the day I don't see how people who get music for free are all of a sudden going to see a value proposition in cheaper priced music.

As far as physical CDs go, you won't ever do much better than $11 to $13 as a non-discounted MSRP. It's just not realistic to put a CD through all the distribution channels it needs to go through to get sold for much less than that.

I still think $13.98 for a CD is a fantastic deal when you compare that to the $20 often charged for a DVD you'll watch maybe 2 or 3 times or $20 for a night at the bar that will leave you with nothing to show for it except a hangover.

The only reason people think it's "too much" is because they've been convinced somehow that it only costs a buck to make a CD and don't consider every other cost that goes into putting out an album.

I paid like $15 for the new Wilhelm Scream album and I've probably got 20 hours on that CD already. Anyway, I think you get the picture. It's an issue without any real answer that I can see.

Tobin_Ownlife (February 26, 2008)

All valid points sir. I'm still working up to some of that stuff. Once I have a 7" and a couple more releases under my belt, things could change. Who knows. Best to ya.

jacknife737 (February 26, 2008)

I agree 100%, lower the prices, and people will buy more, econ 101. Also, i'd really like stores to start lowering the cost of older albums as well, i've noticed recently that the prices of new releases have been decreasing, but those cds from 5-10 years ago are still pretty damn expensive.

PatrickEwing (February 27, 2008)

Make $5-7 if you are selling it for $8???????? In what world? If you said the same thing about selling digital music, I would agree. CD's not so much. Think of the process. They have to pay for recording. Then once that is done, they have to get artwork done. Then they send off the information and have the CD's pressed and sleeves printed. Then they have to be boxed and shipped to your local retailer. So where is this $5-7 of profit coming from?

Dante3000 (rich) (February 26, 2008)

That's fucking insane. I don't dislike iTunes but I don't recall the last thing I bought from them (though I did get a $25 iTunes gift card for my birthday, so that's about to change).

Stats like this make me that much happier I buy new music directly through labels (when possible) and that I spent $80 on used CD's at my local record store. I couldn't imagine Wal-Mart being my only option.

earth23 (February 26, 2008)

Don't bother clicking the link to the Reuters story, the entire article has been paraphrased here. Isn't there something a bit degrading journalistically by paraphrasing an entire article? Granted, it's a short Reuters story, so that might get you off the hook.

2+ Replies

Wentz_Equals_Death (February 26, 2008)

don't bother reading this guy's post, it, uh, meh

veganboyjosh (February 26, 2008)

well played, sir. i commend your use of the word "meh".

TheGraveDigger (February 26, 2008)

this is so AWESOME!!! I just downloaded the newest AIDEN ALBUM from itunes. They are the next BEATLES!!!

4+ Replies

Dante3000 (rich) (February 26, 2008)

Dude...Who the fuck are the beatles?
-Dante

baldsteve (February 26, 2008)

Other than the first two records, the Beatles can eat shit. Chapman should have done us a favor and got them all. 2 down, 2 to go.

MattRamone (February 26, 2008)

I'd be happy if the Beatles and Dylan had both died in '66. Also I wish Clapton's and Robert Plant's mothers had had abortions.

baldsteve (February 26, 2008)

I'll take that. I'd also like to have Michael Jackson killed during the filming of the Thriller video, impaled by Vincent Prices dentures.

I hate Led Zepplin dude, fucking hate them.

MattRamone (February 26, 2008)

Oh thank god, someone who understands. I cannot fucking stand Zeppelin at all. Robert Plant is the most annoying singer fucking EVER.

Someone (February 26, 2008)

Possibly one of the most over rated bands ever. I shall always pass on the ZEP, no use for me, no use for you.

kneel (February 26, 2008)

i hate led zeppelin is such a great song.

also fuck janis joplin. her voice is annoying as shit. she sounds like a female axl rose who just drank a bucket of broken glass.

i just cant stand 'classic rock' in general. with the exception of CCR and a few other miscellaneous.

baldsteve (February 26, 2008)

I think we were separated somewhere just after birth. I just don't understand the draw to his voice. It brings me to the point of rage. I also think some of the greatest shit happened at the end of the 60's. We got rid of Morrison, Hendrix and Joplin... all by their own hands, no martyrdom. That is the only thing that really sucks about Lennon getting it the way he did, he was basically turned into a Saint.

kneel (February 26, 2008)

wow, there is a band out there worse than the beatles?

baldsteve (February 26, 2008)

Several in fact son, care for a list?

MattRamone (February 26, 2008)

Aerosmith Aerosmith AEROSMITH OH MY GOD WORST BAND EVER

kneel (February 26, 2008)

i love it when i proudly proclaim that i hate the beatles, and every head in the room turns around, wide-eyed, and, like robots, they all say 'how can you say that about the beatles. i mean you can say it about any band other than the beatles, but they are classic'

you know, if i said 'i dont believe in god', or 'fuck god' they wouldn't bat an eye. but they treat the beatles as if they are sacred.

fuck them. the beatles sucked. they are the antithesis of rock and roll. just shitty pop-music. and getting knighted? royalty and rock and roll do not mix.

LookBackAndLaugh (February 26, 2008)

Opinions are for getting attention!

kneel (February 26, 2008)

this is not an opinion, this is a fact.

sfbarker (February 26, 2008)

I bought Dirty Deed Done Dirt Cheap, the remastered version, for $6 at Walmart. Beat that iTunes!

Tobin_Ownlife (February 26, 2008)

I think in the end, whether you go to Wal-Mart or I tunes, you are supporting the same sick fucks. Take your pick I guess, or go directly to the band or label.

7+ Replies

fallingupwards84 (February 26, 2008)

not sure if "sick fuck" is an accurate description of Steve Jobs...

victim (February 26, 2008)

no, but its a start

fallingupwards84 (February 26, 2008)

a windows man, i see

victim (February 26, 2008)

You can't seriously be defending a douche like Steve Jobs, right? If anyone fits the hipster asshole stereotype PN loves to make fun of its that nit. And don't kid yourself about his "ethics" or his "innovation" either.

Steve Jobs sucks

fallingupwards84 (February 26, 2008)

be specific, how does he "suck"?

Guy_Incognito (February 26, 2008)

I hear you on Walmart, being the #1 consumer of slave labor in the world. But what sick fucks are you talking about at Apple? They seem like a decent and well run company.

fallingupwards84 (February 26, 2008)

they make money, duh!

Tobin_Ownlife (February 26, 2008)

Your right, bad argument. Now that I think of it, I suppose my problems with Itunes doesn't really come from them. I don't like DRM protected music. I think the prices are way too high for digital music. I hear major labels don't pay their bands for Itunes sales, for the most part. I think bands should put their digital music on their own site for sale. I have also heard of a digital music store that pays the music owner 100% of the sale.

Guy_Incognito (February 26, 2008)

Hmm, well I've never heard of a label not paying a band for digital sales (legally atleast). Mechanical Royalties are not arbitrary and predetermined by law.

Bands can put digital music on their own site for sale. The trade off is that they don't get the investment in marketing that labels normaly front for their bands. The whole point of being on a label isn't so your CD gets sold at Best Buy. It's so that you get access to the moolah they have to blow on ad campaigns and tour support for you.

(not directing any of the following rant at you specifically)

I think people dramatically misunderstand the whole point of being on a label. If you are truly smart about your band, then royalties shouldn't be the main issue for you. I'd rather make nothing on royalties yet have a label that spends lot of money to promote my music so

show rest of comment

Guy_Incognito (February 26, 2008)

Hmm, well I've never heard of a label not paying a band for digital sales (legally atleast). Mechanical Royalties are not arbitrary and predetermined by law.

Bands can put digital music on their own site for sale. The trade off is that they don't get the investment in marketing that labels normaly front for their bands. The whole point of being on a label isn't so your CD gets sold at Best Buy. It's so that you get access to the moolah they have to blow on ad campaigns and tour support for you.

(not directing any of the following rant at you specifically)

I think people dramatically misunderstand the whole point of being on a label. If you are truly smart about your band, then royalties shouldn't be the main issue for you. I'd rather make nothing on royalties yet have a label that spends lot of money to promote my music so

show rest of comment

kneel (February 26, 2008)

not the same sick fucks.

different sick fucks. these sick fucks actually pushed an open format (steve jobs pushed the music industry to remove DRM requirements for online sales).

and these sick fucks aren't monopolistic. although maybe thats because they havent gotten to that level yet.

Tobin_Ownlife (February 26, 2008)

Actually, I think in Europe, Apple was sued because they held a monopoly of sorts over digital music and Mp3 players. I would have to look into that again though.

kneel (February 26, 2008)

i dont think so. there is plenty of competition in the mp3 player market. but the other devices are generally inferior.

plus their player will let you use mp3s

and the format itunes uses, aac, is a standard. the DRM they apply to aac is NOT a standard, but they have licensed it to other companies. (i forgot who, but there was a company or two out there making mp3 players that worked with itunes music store for awhile).

and now itunes music doesnt have to have DRM, so you can take your music anywhere.

nothing monopolistic there. just a great product that became really popular.

fallingupwards84 (February 26, 2008)

i dont buy music from iTunes, but i do subscribe to the Daily Show and Colbert Report episodes on iTunes... also started using the iTunes rental service

3+ Replies

MattRamone (February 26, 2008)

How does it compare to Netflix's unlimited Watch It Now feature?

fallingupwards84 (February 26, 2008)

not sure i've never used Netflix so i have nothing to compare it to, but it was fast and easy... i rented Superbad and the Simpsons movie and it took about 20 minutes to download, so its convenient enough

kneel (February 26, 2008)

i installed vmware and windows xp on my imac so i could try out the watch it now thing, and i couldnt stand it. maybe somethings up in my config but the video quality was attrocious. on one of the videos i couldnt even read the credits because they were so pixellated. maybe when it works natively on OS X later this year it'll be more usable. or if they integrate with xbox360 or something.

LORDSHREDDER (February 26, 2008)

iTunes is crap. The quality and ID3 manipulation of M4As is total crap.
Besides, I would never ever pay for digital music. It would cost about as much to buy the album on itunes as it would to get the physical CD. But, you don't have CD quality sound, you don't have a physical backup of the music, and you don't have the booklet with lyrics, and potentially killer artwork (such as Mastodon's Leviathan). The cost to manufacturer CDs is pretty minimal, especially with major labels. So the cost for iTunes must be next to nothing, since it's all digital. Download that shit!

4+ Replies

Tobin_Ownlife (February 26, 2008)

That's one of my main arguments as far as paying for digital music goes. You are paying just as much for a lower quality version of the music and nothing else. That's shit and I don't blame people one bit for downloading music illegally. If the physical copy costs $8-$10, I think the digital version should be several dollars cheaper. Absolutely no manufacturing costs should equal cheaper music.

MattRamone (February 26, 2008)

I mean, if digital albums were $3-4, I would be more than happy to accept lower quality versions than what can be found on mp3's.

fallingupwards84 (February 26, 2008)

dont hate me, but i really cannot tell that big of difference in sound quality

weffjebster (February 26, 2008)

Yeah, I couldn't tell THAT much of a difference until I took Audio Design and was tasked with showing how the mp3 encryption process works. Do yourself a favor... Get Audacity, import an AIFF or a WAV, make a 128 kbps mp3 out of it, invert it and play it at the same time as the AIFF or WAV. The only thing you'll hear is what's lost in the encoding, and... oh god.

On second thought, don't do it 'cause it'll ruin mp3s for you forever.

fallingupwards84 (February 26, 2008)

haha yea i'll just refrain from doing that and remain content with my mp3s

88-fingers-tony (February 26, 2008)

Record Breakers was America's second biggest music retailer until they left the suburbs.

karmabad (February 26, 2008)

I don't use it often, but the store has an awesome catalog of stuff to buy. Last week actually used it to buy an older patton oswalt cd and a ride album.

http://thisblogisover.wordpress.com/

1+ Reply

baldsteve (February 26, 2008)

Dude if you like Patton and bought 'feelin kinda patton' throw that bitch in the trash, go over to his site and buy 222. It's that show uncut and it's fucking rad.

PatrickEwing (February 27, 2008)

Now imagine if iTunes actually priced their product properly how much of the market they would own....

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