MeidaMemo is reporting that Warner Music Group has announced that they have seen slower sales growth of iTunes Music sales after last year’s introduction of variable pricing. Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple’s iTunes (AAPL) decelerate since the price increase: Industry-wide, year-over-year “digital track equivalent […]
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Major Music Labels Seeing Slower iTunes Music Sales Growth After Last Year's Price Hike

itunes1.jpgMeidaMemo is reporting that Warner Music Group has announced that they have seen slower sales growth of iTunes Music sales after last year’s introduction of variable pricing.

Warner Music Group (WMG) said this morning that it has seen unit sales growth at Apple’s iTunes (AAPL) decelerate since the price increase: Industry-wide, year-over-year “digital track equivalent album unit growth” was at 5 percent in the December quarter, down sequentially from 10 percent in the September quarter and 11 percent in the June quarter.

And since iTunes sales make up the majority of Warner’s digital revenue, growth is contracting there, too. In the last quarter, digital revenue at the label was up 8 percent compared to the previous year; a year earlier that number was 20 percent.

Warner CEO Edgar Bronfman Jr. is still claiming that the price increases were a “net Positive” for the company, but does have enough sense to realize that raising prices by 30% in the middle of the worst recession in years, wasn’t the best move.

MediaMemo goes on to say that Apple still has approximately 70% of the digital music download market, and reached 25% of total music sales in the U.S. just last year.

In my opinion, this is exactly what’s wrong with the music industry. The major music labels are becoming increasingly irrelevant due to indie musicians using the web as a distribution channel, in effect removing the middle man. Instead of retooling their companies for the changing landscape, the music labels decided to go with they myopic view and just raise prices in the middle of a recession. These jokers won’t be around in 20 years.

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