Posted by: Aaron Pressman on August 29, 2006
Could be just a coincidence but maybe Apple (Symbol: AAPL) is finally feeling some competitive pressure on the downloadable music front. Checking out the iTunes Music Store this morning, there’s a link to albums priced at only $6.99. Steve Jobs has so far been adamant about sticking to a one-size-fits-all pricing scheme. So even though only 40 or so albums are listed – and all from bands I’ve never heard like Gran Bel Fisher and Quietdrive – this could mark a significant change in strategy. Could just be a test
and some of the albums included on the two pages are actually selling for Apple’s usual $9.99 price. UPDATE: Some albums are listed on the first page for $9.99 but are $6.99 when you click through to buy.
The reason I was particularly intrigued is that only two months ago, I altered my buying habits. For the first couple of years I had an iPod, when I wanted to buy some new tracks I used Apple’s music store. But earlier this summer, the growing buzz about a competitor, called eMusic, got my attention. Checking out the site, I noticed they stocked a lot of music I listened to in my youth that I was kinda missing. And all the tracks were offered in an unprotected MP3 format, so they’d play on my iPod. So I signed up and have since bought more than half of my “new” music there.
Some analysts and bloggers have noted a decline in the number of tracks bought from Apple’s music store per iPod sold over the past couple of years. I’ve tended to be skeptical of such reports because they assume that all iPods ever sold are still in use. That’s certainly not the case in my household where two iPods have been retired after two new iPods arrived.
Viewed on a quarter to quarter basis, the change reverses. In the quarter ended April 1, 2006, for example, Apple reported 8.5 million iPod sales and music revenues of $485 million, or $57 per new iPod sold. A yera earlier they company sold 5.3 million Ipods and $216 million of music, or $41 per iPod. That’s not a fair comparison either, since there certainly are more iPods in use now than a year ago — the whole market isn’t just replacements or it wouldn’t be growing. Still music sales rose 125% versus just 69% growth in iPod sales. Shares of Apple have rebounded nicely from a recent low in mid-July just over $50 to yesterday’s close of $66.98 as the quarter’s results were seen as better than expected.