When Music Went Digital: Launching the Digital Music Downloading Era

Imagine if Cable and satellite stations did away with their whole packaging bundles and instead gave each customer the power to pay for stations on an individual basis.

No longer would you have pay for a large expensive cable/satellite bundle just so you could watch a handle full of stations. You would be able to pay for only the stations you wanted to see and not be stuck with a hefty price tag having to pay for a bunch of other channels you never watched.

In essence this is what the introduction of digital downloadable music did for the music business. Thanks to the introduction of the digital download, if a listener liked a particular song they didn’t have to go out and buy the musician’s whole cd just to get that one particular song, especially if they wouldn’t like the other songs. The introduction of the digital download service allowed customers to buy songs on an individual basis at cheap prices.

iTunes Chart
iTunes Downloads

When Apple launched its Digital download service in April of 2003, it introduced a new way consumers could buy music. This new format came at a point when music sales were already at their strongest, with CD’s selling nearly a billion units a year after the turn of the millennium. It wasn’t long until it was made clear that consumers preferred the pick and choose convenience of digital downloading as digital units outsold CD’s by 2007. By 2011 digital downloading grossed more revenue than physical albums. Just last year alone, Digital downloads outsold their physical counterparts 7 to 1.

Why Digital Downloads?

The two main driving factors behind the successes of the digital download are price and convenience. The underlying attribute of the successes of digital music is the pricing: physical formats like the CD have production costs and distribution costs. This leads the Label to share some of the burden with you as they charge some $13 for a new release at a local retailer.

iTunes and other digital music distributors don’t have pricey production and distribution costs, and customers can buy singles for McDonald’s Value Menu prices, from between 99 cents and $1.29. The digital version of songs provide customers with a great value. If you’re like me, you probably only buy a handful of artist’s albums.

It is a real convenience to be able to buy just the single you might have heard on the radio. You don’t have to drop everything and drive on down to the closest retailer just to purchase the song. With digital downloading you can get the song in an instant just by firing up iTunes on your computer. The emergence of smartphones and other internet equipped mobile devices now even allows you to buy songs if you’re on the go.

The Trouble with Piracy

After ten years, digital downloads face old and new foes alike, including piracy and the recent emergence of music streaming applications.

Though digital music introduced a quicker way for us to receive music, it also made it easier to pirate music. Since music made its digital debut at the turn of the millennium music sales have nearly dropped by 50%, much of this because of piracy. The Recording Industry Association of America reports that on average we illegally download somewhere between $7 and $14 billion dollars’ worth of songs annually.

US Album Sales

Spotify/Pandora taking a toll on digital downloading?

Spotify
Spotify use in 2012

The emergence of streaming services like Pandora and Spotify also seem to affecting the digital music industry. If you have unlimited accesses to stream whatever you want from wherever with Spotify/Pandora on your phone, then what’s the point of ever having to pay for and download songs anymore?

What’s the Future of Digital Downloading?

With Spotify and Pandora become ever more popular, will streaming replace iTunes and downloading like digital downloading replaced CD’s in the early 2000’s?

Many major artists have sided with downloading over streaming services, claiming that streaming takes away from album sales, thus hurting their chance of making a living. Artists like Taylor Swift, Kid Rock, and AC-DC, have choose in the past few years not to release their records onto streaming services, in hopes that they’ll see higher album sales.

Taylor Swift

But is this enough to combat streaming? Surely there can be more done to make iTunes/digital downloading more appealing. Might I suggest a lowering in digital album and single prices? If consumers are able to buy whole albums digitally, as well as singles at an equally reduced price, I think it will encourage more people to go out there and buy the songs/albums they like.

What changes do you think need to be made by iTunes and digital downloading’s to help them compete with streaming services? Do you see streaming as the new standard of how we listen to music? Please feel to leave your comments below, and thanks for the read!

– Carver Terpstra

2 thoughts on “When Music Went Digital: Launching the Digital Music Downloading Era

  1. Although this would be incredibly difficult to implement, but I think that when a consumer streams a song on the computer or from whatever device they use. That it should count towards the single sales, or at least keep record of how many times the song was fully played on the website. I for one enjoy getting a new CD from the store, even if I don’t want every song on the album. As for the cable situation. There’s a reason that a lot of people are veering towards Netflix and Hulu Plus because most of the time, the consumer is paying for channels that they never watch just to watch one particular program. Bundles is probably be the reason that cable is becoming less and less prominent.

  2. I like your point on lowering the digital downloading costs, but I don’t think that will ever happen. At roughly a dollar a song, Apple (or other download service) and the copyright holders are already splitting cents and I dont see these corporations sacrificing their digital profit any time soon. What I would expect is a drop in price for physical formats. CDs aren’t dead yet, and I’m sure that the industry isn’t ready to let them go.

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