iTunes: Still on That First $20 Gift Card

By Richard Menta 6/17/07

I'm not convinced yet that EMI's strategy to remove digital rights management from the music it peddles will alone bring the sharp rise in sales EMI is betting on. The reason I have doubts it will succeed is because I feel price is a bigger issue, and the evidence I put forth to support that notion are my own personal iTunes purchase patterns.

I realized not long ago that I have milked my $20 iTunes gift card for over a year now with several dollars still left on it. The $0.99 price point limits the number of tracks I can buy to 20 and so to maximize value I find myself hording track buys. Simply put, I save my selections for only those songs I deem most worthy.

To be truthful, this is how all of us have purchased our CDs since that format finally championed over vinyl's hold in the late 80's. I can afford to buy more $0.99 tracks, just like I can afford to buy more CDs, but it's an issue of value more than anything else and that is what ultimately controls my spending habits.

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DRM-free tracks on iTunes sell for $1.29, which now limits me to only 15 DRM-free tracks per $20 gift card. Even though I have more flexibility with the music I buy I doubt it will change this buying pattern I seemed to have settled into - a music buying pattern that is still based on the principal of scarcity. If the buying patterns for other consumers are similar to my own then we probably won't see the significant uptick necessary to lure the other major labels to remove DRM from their music. Furthermore, it looks like these DRM-free tracks are not all that free afterall, something that is already causing a backlash.

If the price were, say, $0.25 a track I would most likely purchase all of the tracks I passed on at the $0.99 price point. At a dime-a-track I would purchase in significant volume and most likely would be on my 50th iTunes gift card right now. Lower prices lowers the risk of experimenting on new music. If I make a mistake, it's only a dime. The end result is that I spend much less per track, but my total yearly music expenditure rises exponentially. It will rise because the value I receive from even marginal purchases is still greater than the money I paid for it and value is all any consumer is looking for.

A few weeks ago I wrote about a glitch I ran into when I purchased a track on iTunes by Josh Ritter titled Kathleen. The track plays on my iTunes application, but it won't play on any of my iPods. Apple's service was very good, but unfortunately they could not solve the problem so they refunded my purchase.

I did find out recently that Josh Ritters music is available DRM-free on eMusic, a service that charges only $0.33 a track for MP3 files. Even though EMusic's song catalog is considerably more limited than iTunes - none of it is major label product - it comes closest to satisfying my consumer wishes. I am only one consumer, but I suspect that there are others who feel the same way as I do. Maybe like me they have hesitated to take the eMusic plunge, because they too want a song catalog that is not restricted to a modest percentage of the total music output available.

But as major label sales plummet it looks like we are witnessing the new rise of the independent artist. More and more I am finding the independents are supplying most of the good tracks I have been showcasing on my regular iPod Playlist articles.

iTunes carries all of these independent artists too, but maybe eMusic is still the better place for me right now. Obviously, I am not taking as full advantage of iTunes broad catalog so maybe it's best I move on.

Other MP3 stories:
iPhone Poll Says 9% of Cell Users Want It
iPod Playlist June 16, 2007
iPod Killers for Summer 2007
- 38 new portable players

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