Business

INDUSTRY ANALYSIS

The iTunes Phenomenon, P2P Networks and Music Lite

There was an interesting article in the New York Times over the weekend. Called “From a High-Tech System, Low-Fi Music,” its focus was on compressed music files that are lossy by virtue of the fact that they’ve been compressed and, hence, are missing information.

So people who use iTunes for their iPods aren’t getting value for money, the story suggests: “Customers are led to believe that they are getting a CD in all respects except the trouble of going to the mall. The iTunes store does not warn about the permanence of its method of compression; once freeze-dried, there is no way to reconstitute the music into CD quality for playing through a good stereo.”

In other words, iTunes-cum-iPod users are paying way too much for far too little — literally.

While this is correct, Apple is far from being the only villain in the piece. The same applies to the other corporate music sales sites.

Loss Leader for iPod

iTunes is a loss leader for iPod, and iPod is in turn a kind of nonloss leader for Apple products in general.

The amazing marketing and PR skills of Steve Jobs and the people behind him ensure the mainstream media keeps on pumping Apple as though it’s all there is.

Big Music does the same for the corporate music sites, all offering identical mass-produced “product” manufactured and supplied directly or indirectly by the Big Five record labels in their many and various forms, and all sold for more or less the same prices.

This ensures there’s no competition.

However, the vast majority of people who download compressed music tracks don’t really care. They don’t, after all, get their music goodies from plastic music sites such as iTunes. Nor do they use Apple hardware or software.

The vast majority of people getting their music in digital form get it for free by way of P2P networks.

Immaculate Quality or Music Lite?

What’s more, whether they’re among the scant few — relatively speaking — who cough up a buck per download from the corporate online music stores, or whether they’re among the millions and millions who share music via the P2P networks, they’re not looking for immaculate quality when they download.

Most people want shrink-wrapped tracks so they can hear music while they’re skateboarding, biking, listening in their car or on boat or plane or train — or whatever.

They don’t want to be carrying stacks of CDs or DVDs around. In this kind of context. Music Lite is fine.

Although the music industry flatly refuses to admit it, when downloaders and file sharers find something they like, they go out and buy a CD holding the “full” version.

However, as the New York Times piece implies, forking out a dollar for a Big Music track is dumb, very dumb, and bit rates have nothing to do with it.

Music Industry Knows

A dollar — or the UK, French, German or Spanish equivalents that are usually more than that — is grossly excessive whether it’s for the world’s most perfect recording or a Kellogg MP3 that’s full of snap, crackle and pop.

The music industry knows it, and could be turning the tide, fighting its pirate troubles and creating a happy user base with P2P as its distribution and marketing vehicle, selling “product” at reasonable prices.

Data transfer rates and storage capacities are moving increasingly toward mind-boggling sizes. Soon, there’ll be no reason why high-fidelity downloads can’t be achieved. Purists could then grab perfect recordings for 30 or 40 cents a go, say, while MP3 versions could go for 10 or 15 cents, perhaps.

And there are other models such as the Electronic Frontier Foundation’s. But then the labels — not to speak of the movie studios — would be forced to compete head-on and up-front with the millions of independent artists and companies around the world.

And that’ll never happen.


Jon Newton, a TechNewsWorld columnist, founded and runs p2pnet.net, a daily peer-to-peer and digital media news site focused on issues surrounding file-sharing, the entertainment industry and distributed computing. p2pnet is based in Canada where sharing music online is legal.


2 Comments

  • I’ve noticed Apple talks about offering "lossless" music downloads, as well as higher bit rate AAC, but of course at higher prices. I suppose there hands are tied by the holders of the recording rights.
    The bottom line is that most of the Music Industry is profit greedy, care not a whit about their consumers, to whom they would just as soon feed anyone popular on star search; and possibly they do not even care about music any more. They are not fools, though, and the victory they have had lobbying Congress to believe the average music fan is of criminal intent is outrageous, and damming.
    However, I disagree that this is a sustainable situation. One might note the fall of the Music Industry in Latin America; or note that there are international sources to buy downloads from for a penny per megabyte (choo$e your quality).
    Just as sure as the fall of Communism, and the rise of Open Source, advances in digital recording and distribution already here will level the playing field.
    May the best music win. Humankind deserves the liberation of song.
    That is a principal that predates capitalism and is even more fundamental to humanity.

  • First, no argument about the sound quality/disc space issue – as someone with 4,000 CD’s and a couple ipods – I have purchased just a handful of songs – mainly because of the sound fidelity issue but I think we’re asking too much of the itunes music store.
    Sure, Apple could sell tracks at different bit rates but at different prices? Not only would they be required to expand their storage space but the complexity of tracking at what VBR bit rate (hey, I bought the 192 but got a 128 file) and frankly, the itunes music store is not for everybody. For some reason, people think an online store has to be for everybody at all times.
    REal brick and mortar stores are not like that. Like everything else, there are limitations – in fact if a mall/store gets too large – people will stop going. The beauty of the itunes music store is its simplicity. CLICK HERE to buy track. CLICK here to buy album. There’s no confusion about what format to buy at what bitrate and in all likleihood, a different pricing scheme with different bit rates.
    Would I buy a classical track at 128? No. Would I buy the Ramones at 128? Sure. Yes, I AM giving up a little but I don’t have to drive to the store that might be out of stock or that one track I’m missing is on one CD that I have the other 16 songs. But that’s my choice to make. The itunes music store eliminates nothing. It’s simply an additional choice from brick & mortar, online CD stores, music clubs and now finally, a sensibly designed online’digital’ store.
    And while us music fanatics search for virgin vinyl, gold CD, 24-bit, 96-bit, DVD-A, SACD – 80% of the people just want music cheaply and readily available. Why did CD’s sales take off into the huge mass market? Yes, they sold it as "high fidelity" but the reality was the convenience factor won the hearts of the mass market. Small in size, (mass market did not miss LP artwork/gatefold or liner notes), didn’t need a surgeon’s hand to play track 4, nothing to flip over, didn’t really need cleaning and was portable … yes, fidelity was important but NOT the only reason CD’s won over Lp’s … just look at when CD sales too off – when CD players dropped under $200 dollars – you think people listened to CD’s on $5k stereos and speakers, people fling them around the room – stack them together or let thme heat in the car. People buy Cd’s because they’re much more convenient than LP’s, cassettes and 8-tracks (well, that last .05%) – fidelity was secondary.
    It’s exactly the same thing with the itunes mkusic store. First, the ipod – finally an Mp3 player designed by humans who actually listened to music! Now, I want music singles – if you won’t sell it to me, I’ll download it illegally even though the last 4 seconds are cut off … finally a store that lets me buy tracks so I can listen to them on my INCLUDED earplugs … People have a free choice to rip at 320VBR – how many people do? I do – maybe another 5%? Maybe another 10% rip at 192VBR+ and the rest – yep, that 80% who were fine with cassettes recorded on a $199 stereo playing on a $39 walkman – it’s AM radio – it’s simulated stereo – don’t care – just want the music and wanna be able to play it loud without too much feedback.
    So there’s nothing wrong with saying you want the best fidelity but 80% of the people don’t care. It’s like the fact the #1 decision in choosing a fast food restaurant is which one they’re closest to … and keep in mind, CD’s are also compressed audio files … DAT – compression – even a reel to reel has loss and added noise – so unless you can only listen to live music sitting front and center … we all have to compromise a little, it just depends on how much …

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