When Steve Jobs made the rounds of the major record labels in 2000, he knew he had them in a barrel.
Music piracy, kicked off by the original Napster last June, is a threat to the recorded music industry. The new frontier for music is online and labels are completely unequipped to deal with the biggest change in music distribution in a century. They had to get into the business of selling music digitally, but how?
Oh, the labels tried to build their own download stores, but Pressplay (originally called Duet and owned by Universal and Sony) and Musicnet (all the other majors) were sad ones. failure First, they are expensive. For $15 a month, fans can stream 500 songs per month, get 50 downloads and the ability to burn each of those songs to CD 10 times.
Second, it’s messy for the consumer. You need to know what label a song or artist belongs to. Terms of use are confusing and digital rights management (DRM) locks on files make transferring them difficult and frustrating. It’s easier to steal music.
Third, the labels couldn’t work together on a unified platform because that would violate all kinds of antitrust rules, a legal situation that also helped derail Napster’s proposed purchase of the labels.
The labels have all the digital products but no way to distribute and sell them. Apple’s iTunes offers a way out of this bind.
Jobs convinced the labels that allowing him to sell individual songs for 99 cents each was the way to go. And because the labels have no idea what they’re doing — and because Apple is committed to spending millions on marketing (not to mention they have this new gadget called the iPod) — all labels are signed on the iTunes Music Store.
His pitch worked, and boom — the music industry changed forever.
There have been other attempts at creating digital music stores. Cductive was founded in 1996 and sold MP3 downloads for 99 cents (it was acquired by eMusic in 1999). Sony debuted Bitmusic in Japan in 1999, offering mostly singles from Japanese artists (it failed). Factory Records has launched Music33, offering downloads for 33 pence each ( here ). There’s even a Canadian digital music store called Puretracks that lasted about a nanosecond.
Nothing beats iTunes, especially when the labels agreed to remove all DRM locks in 2007. (I still have songs on my computer in the old .mp4a format that are locked and cannot be freely transferred from one place to another.) This soon became de rigueur for all releases available through iTunes.
And because the iTunes Music Store is so easy to use on all computers (offering a Windows version is a big deal), it has become a favorite destination for buying digital albums and tracks. At one point, iTunes was responsible for 70 percent of all digital music sales. Almost all would-be challengers were crushed. Hey, anyone remember hmvdigital.com?
But the whole transition from selling pieces of plastic to digital tracks has left a bad taste in the mouths of labels. They completely surrendered the distribution of their product to an outsider who charged a 30 percent commission on each file sold. They vowed never to let this happen again.
Fast forward to now. Streaming, not downloading, is king and the labels have firm control over how streamers can do business. They will earn over US$10 billion from streaming by 2022. They also continue to receive petabytes and petabytes of data on how music fans consume music.
And since streaming is so cheap — or even free — music piracy is a part of what it used to be.
As a result, sales of digital tracks and albums continue to fall. In Canada, digital album sales were down 15.9 percent from this time last year and digital track sales were down 7.5 percent. Meanwhile, streaming is up 13.9 percent from a year ago as Canadians reliably stream somewhere around 2.3 billion songs a week.
I can make the situation more difficult. In 2012, we bought 1.3 billion digital tracks. Last year, we bought 152 million. That’s a crash of 88.6 percent in a decade. These numbers are clearly not good. Paid downloads are quickly becoming the next cassette.
Sales used to be front and center on the iTunes home page. Now you have to do a little search for the iTunes Music Store when you open the app. If you go to Amazon, a search for MP3s will take you to a page that pushes streaming and physical products. Neither company breaks out how much digital music they sell in their financial reports.
So here’s the question: How long will Apple support iTunes? Heck, how much longer? all are there digital tracks/album sales? Let me issue a plea that this will not happen.
I absolutely need iTunes to keep going because of my work. I need to get full and legal access to the songs to do my radio show, The Continuing History of New Music, so I buy up to a dozen songs a week. My Mac tells me I have 79,655 items taking up 564.65 gigabytes in my library. A small number of those songs are iTunes downloads.
Lots of stuff for downloading. DJs need files they can mix as part of their sets. Older music fans have come from a diet of buying CDs and vinyl as well as iTunes because it offers permanent ownership instead of renting music from streamers. Insiders know that if downloads increase for an artist, it may indicate that the artist has switched to an older demo.
Artists can also see decent income from iTunes, especially after they’ve been in the news for something. Paid downloads are on the rise and they pay far, far more than streams. Artists, labels and managers also monitor iTunes for songs that might appear on the iTunes charts, a possible indication that something interesting is happening.
What are the options if iTunes goes away like Google Play Music did? Well, there are other digital music storefronts. There is the aforementioned eMusic, which went online selling DRM-free MP3s in January 1998, three years before iTunes debuted. It has contracts with major labels and dozens of indies. Unlike iTunes and Amazon Music, this is a download-to-own site that requires the purchase of a monthly membership. Its library isn’t as deep as iTunes (15 million songs compared to at least 60 million) but it can get the job done for some people.
The most interesting digital music storefronts are those that sell hi-res lossless files for people who demand the highest in audio quality. For example, 7 Digital will sell you all kinds of digital music, including many 24-bit FLAC files. That’s fantastic — if you have the necessary hardware.
As well Pro Studio Masters (I used it quite a bit for buying FLAC files). If that’s your jam, be sure to check it out HD Tracks and to France Qobuz. which will debut in Canada later this year.
DJs and dance music fans have known for a long time Beatportt. If you’re on the indie side of things, you’ve probably bought a download or two from Band camp. And then there is Bleepdedicated to independent artists and labels.
Still, though, it’s hard to beat iTunes for choice and functionality. I really hope Apple doesn’t do something stupid like killing it. But with the number of sales in the music industry every week, you have to wonder how far it can drop before it’s time to move on.
If that day comes, it will be very, very sad.
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Alan Cross is a broadcaster with Q107 and 102.1 the Edge and a commentator for Global News.
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