In a recent article (June 7), I posted the following excerpt from a Rolling Stone piece on music sales:
LOSER OF THE WEEK: Digital sales. Earlier this year, iTunes, Amazon MP3 and the rest seemed invincible - according to Billboard, sales jumped 16.2 percent in the first two months of 2013. But then came a steep decline, worrisome for a record industry that has spent the last 10 years staking its future on iTunes et. al. This week, the trend continues, as digital sales are down three percent compared to the same point last year.
So, yeah, Peoples is correct -- a download (though hardly a windfall for most artists) is more valuable than a stream, but for how much longer will that be relevant? Should musicians continue to hold onto the sales model, something that, in its current state, remains in Apple's best interest? Should they allow Apple to effectively steal streams simply because it pseudo-promises digital sales?
We're told we should buy Apple's implied prediction it will sell more music -- as it (kind of, sort of) deemphasizes streams -- but, at the same time, the music industrial complex tells us we should discard Pandora's promise that a more favorable royalty system will lead to more competition and larger pie for artists to split.
Apple is taking these cats to the cleaners.Steve Jobs used to say consumers didn't want the subscription models on-demand services such as Spotify and Rdio (and now, on the radio side, Pandora) continue to grow. But he was only protecting his best interest at the time -- the digital sales, the download model. The Apple executives Jobs left behind do not have the vision he had. Jobs likely would have embraced the subscription model once he saw the sales model set to wane. And, based on the numbers I cite earlier in this article, it looks like we might be there. Sure, iTunes continues to set revenue records, but, teasing out music sales -- and looking at them as a whole -- they're down, suddenly, over the last two months. Why are they down? I reckon it's because consumers absolutely are embracing the subscription model. When I discover a new band on Pandora or, eventually, iTunes Radio, I have virtually zero incentive to buy their songs or an entire record via traditional channels (CDs, where sales are down; digital downloads, where sales have also trended down the past two months). All I need to do is go to Spotify or Rdio and add the entire record or just the songs I like to my "collection." These companies are out in front of the new model -- the digital access model. They're throwing the digital download model out the window with the bath water and the music industry's fate. It's time for music people to let tech people into their world. Allow tech visionaries -- who are in and care about the music business -- to help make the rules, not Apple, a company willing to experiment in a space that impacts a tiny fraction of its overall revenue. Follow @rocco_thestreet -- Written by Rocco Pendola in Santa Monica, Calif.