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Based on what Wikipedia says I am estimating that iTunes has maybe sold a total of 6.8 Billion songs since April 28, 2003 – i.e. exactly 6 years ago. Now Apple just announced that over 1 Billion iPhone & iPod apps were downloaded around the world (a good list of the top 20 free & paid apps is at Ben Tao's blog), during the past 9 months, already. Why is that? Why is music apparently less popular than software gadgets? Here is my 2 cents:
- The music on iTunes is always paid-for while apps are sometimes free and sometimes paid (and at different price points), and are therefore an easier sell. Try and buy is still the best way to get hooked – and iTunes does not even allow me to listen to the full track before I need to shell out my dollar! In any case, the fact that some apps are entirely free can serve as a good reminder that for the creators there are many other, equally attractive forms of remuneration than just getting immediate cash. App developers certainly seem to have many other reasons than just getting paid 'by the unit', such as creating a stronger 'Pull' for their other offerings or providing the app to get a wider audiece for their skills – and the same argument could certainly be employed for music I would reckon. Why not start with the stream-on-demand, then offer the download for free or for a very low price – but then upsell the fans to a much larger fan package, similar to what Depeche Mode is now doing with their Season Pass. The ever-resourceful Techcrunch, btw, estimates app store revenues to be $777 Million for 2009 – I would be even more optimistic than that, though, because I expect much higher sales of iPhones and iPod after the next version comes out in June, featuring the build-in FM transmitter that can send the music wirelessly to your car stereo (radio execs… are you ready for that?)
- The music on iTunes is both too cheap and too expensive (depending on how you look it it), but there's nothing that fits the "free stuff + premium" package that people like so much these days (such as for my favorite, Instapaper) which is how most people get hooked on the good stuff. In this world, Freemium Rules, indeed.
- Most apps are really cheap and it's easy to part with a few dollars for something that may have real value for me – especially if one of my peers has just recommended it. I have purchased at least 40 apps, and I can tell you that the barrier to purchase an app is much lower than the barrier to buying songs at $1 / Euro 1. And yes, sure, unlike music the apps can't be gotten for free anywhere else (apart from what can be done with jailbroken iphones I guess) and that certainly is a factor – but even if they could be 'pirated', I would venture to say that I would still pay for them on iTunes, because it's LIQUID, quick, convenient, low-cost and no big deal. If the music industry can achieve the same (and not just on iTunes!), than you'll see those numbers go up, for sure. Liquid and friction-less are the keywords here – and that, to me, as you may have guessed, means the digital music flat rate.
- Mobile phone apps are about ME, about my personalized style and experience. The apps give me the power to select what I like, try it and love it or hate it. See a guy's apps and you can get a feel for who he is (yes… that goes for women, too, but unlike guys you probably don't see them comparing iPhone apps over a drink;). If we can make music -and other content- more personal, more customized, too, my hunch is that would help boost the sales, as well.
So, Music Industry, here is my recipe:
Lower Price Points + Freemium + Customizing + Value-Value-Value = Revenue Growth
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