[i:Vibes] Single Downloads on the Rise

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Single Downloads on the Rise

16:02 - May 4, 2004

by Steven H

© ivibes Patterns are appearing in the buying behaviour of music fans one year after the launch of Apples iTunes http://www.apple.com/itunes. The Internet is clearly benefiting singles according to reports in the Los Angeles Times...

The fear in the music industry that this would affect albums is only half true. Individual consumers are spending more money on music on the Internet than in record shops. Also they are spending money on other music. The trend has, however, moved away from the album-based business model to the single-based business model seen in the early years of the music industry.

The music labels are very attached to the album model. The single model failed in the nineties, according to the LA Times, as labels tried to push album sales by using singles as a marketing instrument. Albums were needed to reach a "critical level" for a product at which it was worthwhile promoting an artist. Also the lions share of music business operates offline. In the USA, music CDs to the value of $11.2 billion were sold. Online services had a turnover of just $65 million in 2003. In 2004, a turnover of $250 million should be attained (of which $120 million came from song sales and the remainder from subscription fees). Singles are on the up again, however, thanks to the Internet. Music fans have buried the idea of consuming music just as albums according to the LA Times. If you want to have individual songs, you can obtain them free from online sharing networks if they are not available for purchase.

In comparison, differences can be seen in the purchase behaviour of music fans on the Internet and in record shops that show they can coexist. According to the LA Times, mainly older songs are sold online (60 percent), while new releases dominate the "offline sales" of CDs (63 percent). 75 percent of the single sold on the Internet are not in the Top 200. This finding has led to Ellie Hirschhorn from MusicNet http://www.musicnet.com, which operates an online music subscription service for AOL, to the conclusion that online offers cause music fans to buy things they would otherwise not buy.

Sean Ryan from RealNetworks http://www.realnetworks.com agrees with this view according to the LA Times. The average customer of Real Rhapsody subscription service thus spends $150 each year on music, which is considerably more than the average US music CD consumer. Ryan claims that even if Rhapsody customers were to pay less for CDs, this would not be a loss for the labels. Online sales through Rhapsody do not incur costs for the labels compared with CDs.