Why iTunes Thrives While The Music Labels Wither


The big music labels are foundering, headed for the 8th straight year of declining sales. Yet the few remaining music label optimists insist that people are more interested in music than ever, thanks to the rise Apple’s iTunes and digital music in general. They’re right — but that’s not enough to help them.

eMarketer has a concise explanation of of the predicament facing the music business, or at least the major music labels: More people than ever are spending money on recorded music, but each of them is spending less. U.S. music purchasers made up 32% of the population, up from 23% in (pre-Napster, pre-MP3, pre-iTunes) 1995. But per capita spending has dropped from $268 to $120 in the same period.

This is why the music labels, who once dismissed all-you-can-eat subscription plans as a threat that would cannibalise CD sales, are now clinging to the idea like a life raft: Getting customers to shell out a monthly fee for all the music they want is preferable to watching them buy an ever-dwindling number of albums and singles. But it may be way too late to convince consumers that this is a good idea. eMarketer