Year in Review: iTunes

Two thousand and eight was a good year for Apple’s iTunes store with it surpassing 5 billion downloads in its 5th year of operation.[1] It became ranked as the 2nd most popular music store in the United States next to the physical retailer WalMart.[2]

YouTube began including click to buy links on the bottom of its pages containing EMI content, enabling viewers to directly link with stores such as iTunes and Amazon, with the intention of expanding to other US copyright owners before going global .[3]

While there was some talk of iTunes launching a subscription service nothing to date has eventuated.[4]

The Copyright Royalty Board also determined that mechanical royalty rates of 9.1 cents or 10.5% of tracks sales would remain static for the next five years.[5] iTunes had expressed concern earlier that any increase in this rate would have resulted in the store operating at a loss and being unsustainable.[6] The National Music Publishers Association was seeking a rise from 9 cents to 15 cents per paid download while Apple and others from the DIMA were seeking a reduced rate.[7]

Some artists such as Kid Rock, AC/DC and The Eagles elected not to sell their latest releases through iTunes preferring other stores that enabled them to sell full albums rather than singles.[8] Another artist, Estelle, signed to Warner, experimented with removing her single from iTunes once it had become popular in the hope that more people would purchase the album.[9]

The tendency for the per track download arrangement to destroy the profitability and artistic integrity of artists was of concern. In 2007 US consumers downloaded 844 million tracks from digital music stores compared with only 50 million digital albums.[10]

Others noted the benefits to consumers and the prior history of record labels placing one or two popular tracks on an album and deliberately filling the rest of the space on the album with lesser quality tracks, as a distinct advantage over the album only culture.[11] Some argue however that not putting music in easy to purchase places simply encourages customers to access it through illegal download services.[12]

The lack of prominence on iTunes of independent and smaller selling artists has led to many independent labels and artists establishing their own paid download sites catering to a niche audience and enabling greater self promotion and fan exploration.[13] Furthermore, Apple makes around 30% of every purchase from its store (with the funds being primarily directed toward running costs) and selling independently enables these artists to be more competitive.[14]

In a separate issue China blocked iTunes for a short while with the release of The Art of Peace Foundation’s album Songs for Tibet which included a 15 minute track from the Dalai Lama apparently resulting in the censorship of the site.[15] Later reports indicated that access was restored to iTunes but not to the album itself preventing people from within China from purchasing it.[16] Other reports suggested that access was subsequently restored to the album at a later time.[17]

[1] Digital Music News, The iTunes Store: Five Years, Five Billion Song Downloads (20 June 2008) <http://www.digitalmusicnews.com/stories/061908itunes> at 26 June 2008
[2] Digital Music News, iTunes Becomes Second Largest Music Retailer, Fuzzy Math Applies (27 February 2008) <http://www.digitalmusicnews.com/stories/022608fuzzy> at 28 February 2008
[3] AFP, YouTube links to online stores in money-making move (8 October 2008) <http://afp.google.com/article/ALeqM5jRxMsYH4iZreyrPK_Pr4-8M30RJQ> at 10 October 2008; TechDirt, EMI Sets Up Its Own Online Store As YouTube Tries Selling Music (8 October 2008) <http://www.techdirt.com/articles/20081007/2140232485.shtml> at 10 October 2008; Digital Music News, YouTube Trying eCommerce; iTunes, Amazon On Board (8 October 2008) <http://www.digitalmusicnews.com/stories/100708youtube> at 10 October 2008
[4] ZeroPaid, Apple in Talks with Record Labels for unlimited iTunes (20 March 2008) <http://www.zeropaid.com/news/9338/Report%3A+Apple+in+Talks+with+Record+Labels+for+Unlimited+iTunes> at 22 March 2008
[5] SiliconValley/Associated Press, Copyright board leaves music royalty rate unchanged; Apple had threatened to shut iTunes (2 October 2008) <http://www.siliconvalley.com/news/ci_10620493> at 5 October 2008; SiliconValley/Associated Press, Federal copyright board to set digital music royalties (1 October 2008) <http://www.siliconvalley.com/news/ci_10611112?nclick_check=1> at 5 October 2008; Digital Music News, Mechanicals Staying Steady on Paid Downloads... (3 October 2008) <http://www.digitalmusicnews.com/stories/100208rates> at 5 October 2008; TechDirt, Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved' (3 October 2008) <http://www.techdirt.com/articles/20081002/1807062438.shtml> at 5 October 2008
[6] SiliconValley/Associated Press, Copyright board leaves music royalty rate unchanged; Apple had threatened to shut iTunes (2 October 2008) <http://www.siliconvalley.com/news/ci_10620493> at 5 October 2008; SiliconValley/Associated Press, Federal copyright board to set digital music royalties (1 October 2008) <http://www.siliconvalley.com/news/ci_10611112?nclick_check=1> at 5 October 2008; Digital Music News, Mechanicals Staying Steady on Paid Downloads... (3 October 2008) <http://www.digitalmusicnews.com/stories/100208rates> at 5 October 2008; TechDirt, Copyright Royalty Board Keeps Download Rates The Same; iTunes 'Saved' (3 October 2008) <http://www.techdirt.com/articles/20081002/1807062438.shtml> at 5 October 2008
[7] Digital Music News, Oh the Drama: Royalty Decisions Await; iTunes Ultimatum Surfaces (1 October 2008) <http://www.digitalmusicnews.com/stories/093008royalty> at 5 October 2008; The Register, Apple screws songwriters (again) (1 October 2008) <http://www.theregister.co.uk/2008/10/01/apple_itunes_threat/> at 5 October 2008
[8] ArsTechnica, Album-loving artists blame iTunes for changed music tastes (28 August 2008) <http://arstechnica.com/news.ars/post/20080828-album-loving-artists-blame-itunes-for-changed-music-tastes.html> at 1 September 2008; CNet News, AC/DC's iTunes boycott is on Highway to Hell (14 October 2008) <http://news.cnet.com/8301-1023_3-10066360-93.html> at 16 October 2008; Wall Street Journal, More Artists Steer Clear of iTunes (28 August 2008) <http://online.wsj.com/article/SB121987440206377643.html> at 1 September 2008
[9] ArsTechnica, Album-loving artists blame iTunes for changed music tastes (28 August 2008) <http://arstechnica.com/news.ars/post/20080828-album-loving-artists-blame-itunes-for-changed-music-tastes.html> at 1 September 2008; TechDirt, Looks Like That Plan To Remove Songs From iTunes Didn't Work Out So Well (11 September 2008) <http://www.techdirt.com/articles/20080910/2119052228.shtml> at 14 September 2008; Wall Street Journal, More Artists Steer Clear of iTunes (28 August 2008) <http://online.wsj.com/article/SB121987440206377643.html> at 1 September 2008
[10] Wall Street Journal, More Artists Steer Clear of iTunes (28 August 2008) <http://online.wsj.com/article/SB121987440206377643.html> at 1 September 2008
[11] ArsTechnica, Album-loving artists blame iTunes for changed music tastes (28 August 2008) <http://arstechnica.com/news.ars/post/20080828-album-loving-artists-blame-itunes-for-changed-music-tastes.html> at 1 September 2008; CNet News, AC/DC's iTunes boycott is on Highway to Hell (14 October 2008) <http://news.cnet.com/8301-1023_3-10066360-93.html> at 16 October 2008; Wall Street Journal, More Artists Steer Clear of iTunes (28 August 2008) <http://online.wsj.com/article/SB121987440206377643.html> at 1 September 2008
[12] TechDirt, Bands Avoiding iTunes For The Wrong Reasons (28 August 2008) <http://www.techdirt.com/articles/20080827/2214562116.shtml> at 1 September 2008
[13] ArsTechnica, Indie labels bypass iTunes, give digital sales a shot (17 March 2008) <http://arstechnica.com/news.ars/post/20080317-indie-labels-bypass-itunes-give-digital-sales-a-shot.html> at 18 March 2008
[14] Wall Street Journal, More Artists Steer Clear of iTunes (28 August 2008) <http://online.wsj.com/article/SB121987440206377643.html> at 1 September 2008
[15] The Register, iTunes, and Sting, banned from China (22 August 2008) <http://www.theregister.co.uk/2008/08/22/itunes_blocked_china_tibet/> at 28 August 2008; The Register, China pardons iTunes (but not Sting) (26 August 2008) <http://www.theregister.co.uk/2008/08/26/china_pardons_itunes/> at 28 August 2008; Digital Music News, Developing: Apple Investigating Chinese iTunes Store Block (25 August 2008) <http://www.digitalmusicnews.com/stories/082208china> at 28 August 2008; TechDirt, China Blocks iTunes After Olympic Athletes Download Pro-Tibetan Music (21 August 2008) <http://www.techdirt.com/articles/20080821/0312442052.shtml> at 25 August 2008; guardian.co.uk, China blocks iTunes music store (21 August 2008) <http://www.guardian.co.uk/music/2008/aug/21/china.blocks.itunes> at 25 August 2008; Digital Music News, Will the Ban Boost Sales? Tibet Album Pushes Past 10,000 (22 August 2008) <http://www.digitalmusicnews.com/stories/082108tibet> at 25 August 2008
[16] The Register, China pardons iTunes (but not Sting) (26 August 2008) <http://www.theregister.co.uk/2008/08/26/china_pardons_itunes/> at 28 August 2008; TechDirt, China Realizes It Doesn't Need To Block All Of iTunes (26 August 2008) <http://www.techdirt.com/articles/20080825/2219562089.shtml> at 28 August 2008
[17] Digital Music News, iTunes Reinstated In China... Tibet Album Now Included (27 August 2008) <http://www.digitalmusicnews.com/stories/082608ituneschina> at 28 August 2008