Posted by: nickgerlich | March 12, 2008

But Do They Try Harder?

Back around the time folk music, beatniks, and Dobie Gillis were hot, a young Minnesota lad with the nom de tune of Bob Dylan penned this poignant, if unsettling, observation:

Come gather ’round people
Wherever you roam
And admit that the waters
Around you have grown
And accept it that soon
You’ll be drenched to the bone.
If your time to you
Is worth savin’
Then you better start swimmin’
Or you’ll sink like a stone
For the times they are a-changin’.
iTunesYes, the times they were a’chanin’…back in the early-1960s, and to this day, for yesterday it was announced that iTunes is now the Number 2 music retailer in the US, and breathing down Wal-Mart’s neck. And, for the first time in music history, legal downloads now account for 10% of all music sold. BAM stalwarts Best Buy and Target are now in 3rd and 4th place, respectively.

The emergence of Apple’s iTunes is old news; what is “new news” is that people are embracing the idea of buying their music. Now unshackled from the idea known as an album, consumers are free to cherry-pick the tunes they want at about a buck a pop (and iTunes keeps about a third of that as pure profit).

According to the announcement, there were 29 million people who legally downloaded music last year, almost 10% of the US population. But here’s the real trend: people simply are walking away from the tangible CD. Almost half of all teenagers did not buy a CD last year. It is during the teen years that consumption habits are carved in stone, so today’s teens may very well be hammering the final nails in the CD casket.

The iTunes ascension is a consumer behavior issue writ large, for it signifies continued acceptance of not only e-commerce in a general sense, but also the notion of shoppers assembling content in the way they wish. Freed of the tangible product, buyers can select the digital content they want, and organize it as they see fit on their computer or MP3 player.

Wal-Mart, the top seller of both music and movies in the US, is no doubt taking this as a warning. In recent years they have beefed up their own music download selling efforts, as well as allowing customers to create custom CDs (for those tactile-oriented shoppers who still need to fondle their purchases). But iTunes has an early mover advantage, not to mention the marketing genius of Apple behind it.

Where does it go from here? Once again I will invoke the prophet Dylan:

The order is
Rapidly fadin’.
And the first one now Will later be last
For the times they are a-changin’.
It’s just a good thing his career apex occurred back in the day when everyone bought albums, because if he had to live off the royalties of single-song sales, he might be singing a different tune.

Dr “Apple Of My Eye” Gerlich

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