Back in April, we looked at some early analysis from Billboard that suggested that raising the price of songs from 99 cents to $1.29 was hurting sales but increasing revenue. In the comments, everyone pointed out that no conclusions could really be drawn from a policy that had only been in place for a matter of days. Well, it’s been a few months now, and the data is in:
Since February, weekly sales of tracks has dropped from the 25 million-per-week range to 21-22 million in July and 20-21 million in August. […] It must be noted, however, that the cause of the drop in track sales – variable pricing and $1.29 at iTunes for most hit songs – has resulted in an increase in wholesale revenue to labels.
So there are about 4 or 5 million fewer songs being sold on iTunes now, but who cares because the labels are making more money! This is exactly the kind of shortsighted bullshit that got the record companies into the mess they’re in. Sure, revenue might be up a little, but there are fewer people buying music. Fewer customers. Labels should be doing everything they can to nurture every single fan who’s willing to fork over cash for digital files. This is a classic example of the major labels shooting themselves in the foot.
When sales decrease 20-30% every two years, how long can this industry even hope to stay afloat?