iTunes Outselling Tower Records; Does It Matter?
from the what's-it-all-mean dept
For those of you still wondering why the traditional record store needs to be reinvented, it appears that a new report today has some clues. Apple's iTunes has now surpassed Tower Records and Borders Group for music sold, making it the seventh largest music retailer. However, it's likely that a lot of folks are going to misinterpret this news. Already, the news report notes that it's a "meaningful sign in digital music's steady progress." That's wrong. It's a meaningful sign in Apple's progress. Remember, Apple still views iTunes as something of a loss leader to help them sell more iPods. No other online music store has anything like that -- and that allows Apple to be more aggressive in some ways. Note that the top three retailers on the list of sales (Wal-Mart, Best Buy and Target) all are in a similar position. They sell music as a loss leader to get people to buy other products with higher margins. The recording industry hates to admit this, but their products are best served being promotional goods for other offerings. Recognizing that fact certainly would open up plenty of new business models -- but the industry can't seem to let go of the idea that they can get a premium for music alone.