Apple (NSDQ: AAPL) just announced the 10 billionth iTunes music download sale. An impressive statistic for sure, but not the end of the story.
As Apple often does with download milestones, it gave a prize to the 10 billionth download customer and revealed that the song downloaded was Guess Things Happen That Way by Johnny Cash, a song that dates back to 1958. Given that fans of country music skew older than most music fans (nearly two thirds are over 45), it’s interesting to note the age of the downloader of the billionth app: Connor Mulcahey is 13.
Apple’s music and app stores straddle paid content’s demographic fault line. Apps, a fundamentally interactive experience, are tailor-made for the digital natives, whereas the static 99-cent music download remains wedded to a bygone era. Of course, the kids still like music, but the current digital-music product doesn’t compel them to part with their cash in the way an app does. The simple fact is that apps have far greater monetary value for youth than music does.
Music product innovation is the music industry’s way into the app store. The CD generation still values music, but those customers are becoming the foundation of music sales just when they should be making way for the next generation of music buyers. Indeed, three-quarters of digital music buyers are age 25 and older. So while it’s good news for Apple that it has discovered a way to monetize youth, it does little to help music sales.
Which is the reason why the music industry needs to start a period of unprecedented product innovation, whereby apps become a key channel for music sales. (See this for my take on what 21st-century music products should look like.) Of course, there are plenty of music apps already out there, but few are doing much to create a new music product paradigm.
iPod sales slow, while the iPhone and apps prosper. The final pertinent trend here is the slowing of iPod momentum. The simple fact is that iPod sales are slowing. Thus much of the iTunes music download growth is coming from increasing the average number of downloads per buyer but that has limits, particularly considering the weaker appeal among youth. Meanwhile, iPhone sales are growing at the expense of iPods, and app downloads continue to accelerate with unprecedented pace.
Apple remains the behemoth of digital-music sales, but unless the music industry learns how to make products that Connor Mulcahey will buy, the Apple bandwagon will start to leave it behind.
Source: NY Times
