Apple is asking record labels for exclusive iTunes releases
Apple is asking record labels for exclusive iTunes
releases
Apple contends streaming services such as Spotify and
Beats Music have begun to cannibalize download sales on iTunes.
By Dawn C. Chmielewski and Randy Lewis
March 10, 2014, 4:35 p.m.
Apple Inc. has begun pressuring the major record
companies to offer new releases exclusively through its iTunes store — a move
that would initially block availability on streaming services such as Spotify
or Beats Music, according to several people familiar with the matter.
Apple executives contend that on-demand music services
have begun to cannibalize download sales, and its representatives are demanding
the labels create a period reserved for digital purchasing.
Music industry insiders, who spoke on condition of
anonymity for fear of reprisals from the industry's dominant retailer, said
Apple's push for a new release window — similar to the one that some Hollywood
studios impose for films newly released for home viewing — shows the Cupertino,
Calif., tech giant is scrambling to retain its competitive advantage in an
evolving digital music market.
"These are really changing times, and I think
everybody's going to be trying different things, whether it's iTunes, Spotify
or the labels," said Irving Azoff, manager of the Eagles, Christina
Aguilera and other acts. "It's kind of up for grabs."
Apple's iTunes online store accounts for about 80% of all
download sales in the U.S. But after a decade of uninterrupted growth
domestically, digital song and album sales began to slump in 2013 and continued
to slide this year.
Song downloads were down 12% through the first eight
weeks of this year compared with a year earlier, and digital album sales were
off 13%, according to data from Nielsen SoundScan.
Industry insiders attribute the decline to a variety of factors,
including the growing popularity of streaming services, as well as increased
competition for the consumer's ear.
Mobile devices have become the digital era's equivalent
of the Sony Walkman. Some 48% of smartphone owners use their portable devices
every day to listen to streaming music, as opposed to 42% who use them for
downloading music, according to Nielsen.
Although Apple remains the single largest manufacturer of
smartphones, more U.S. consumers now own Android devices running Google's
software, according to researcher the Yankee Group. As consumers gravitate to
Google-powered smartphones, they lose access to the world's biggest and most
widely recognized music retailer, Apple's iTunes.
Apple has been meeting with major label executives, and
approaching individual artists, in a bid to secure exclusivity to bolster
sales. A spokesman declined comment for this story.
"I've never had anyone [at Apple] say streaming is
killing our business," said Jim Guerinot, whose Rebel Waltz Management
handles No Doubt, Trent Reznor and other acts. "They've been very specific
for 10 years about wanting extra content — just like Best Buy, Wal-Mart and
Target. They're very aggressive about trying to do something that will
differentiate them from everybody else."
In meetings with music industry representatives, people
familiar with the matter say Apple has cited the brisk sales of Beyonce's fifth
studio album in December, which was offered solely through iTunes and became
the fastest-selling album in the digital store.
Though few artists enjoy the popularity of Beyonce, Apple
uses the example to buttress its argument that withholding albums from
streaming services can spur sales.
But Beyonce's album also provoked a backlash from
retailers Target and Amazon.com, which refused to carry the CD when it was
released.
More recently, hip-hop artist Kid Cudi's release,
"Satellite Flight: The Journey to Mother Moon," was made available as
an album purchase only through iTunes and other digital retailers. It debuted
last week at No. 4 on Billboard's Top 200 album charts, selling 87,000 units.
Another rap act relied heavily on streaming to build
awareness for a forthcoming release — and debuted at the top of Billboard's
album chart last week.
Schoolboy Q's "Oxymoron," which was heavily
promoted on Spotify, sold nearly 139,000 copies in its first week. The rapper,
whose two earlier albums, "Setbacks" and "Habits &
Contradictions," sold 17,000 and 48,000 units respectively, hardly enough
for a lock on the top spot.
Spotify users in the U.S. had listened to 3.3 million
streams in the months ahead of the album debut.
"It's not a great strategy to try to dictate how
people consume music when they're clearly asking for and in fact doing
something different on a wide scale," said Spotify Chief Content Officer
Ken Parks. "It just doesn't work for anyone."
Longtime music industry analyst Mark Mulligan said
streaming services may be luring away Apple's most devoted music customers.
"It's not that streaming is replacing downloads in a
larger sense," Mulligan said. "What it is doing is going right after
the spending of some of the most valuable download customers there are — and
Apple's most valuable download customer."
dawn.chmielewski@latimes.com
randy.lewis@latimes.com
Comments
Post a Comment