Why People Don’t Spend More At iTunes
Dec 14th, 2006 | By James Lewin | Category: Digital Music, iPods & Portable Media Players 
The “news” that iTunes sales are plummeting seems to have been picked up by every blogger and analyst that has an axe to grind about iTunes or digital music in general.
A common theme in the coverage is that people were finally rebelling against copy-protected digital music.
This would make sense….if digital music sales were really plummeting and if it were clear that the general public cares about digital copy protection. In fact, iPods are selling like hotcakes and the number of copy-protected iTunes songs sold per iPod is up by about 15% in the last few months.
While the doom and gloom predictions for the iTunes store haven’t panned out yet, it’s true that iPod owners don’t spend a lot on digital music.
There’s an obvious reason this, though. Buying albums via the iTunes music store just isn’t a very good deal.
We took a look at the 10 most popular albums of the week (12/16/2006), based on Billboard data, and checked their prices at Wal-Mart, Best Buy and iTunes.
iTunes Store An Expensive Option For Purchasing Music
| Song | Wal-Mart Price | Best Buy Price | iTunes Price |
| Incubus – Light Grenades | $9.72 | $9.99 | $9.99 |
| Soundtrack – Hannah Montana | $6.88 | $6.99 | $9.99 |
| Daughtry – Daughtry | $11.88 | $13.99 | $9.99 |
| Various Artists – Now 23 | $6.88 | $6.99 | $9.99 |
| The Beatles – Love | ($13.88) | ($9.99) | N/A |
| Jay-Z – Kingdom Come | $12.88 | $11.99 | $12.99 |
| Sarah McLachlan – Wintersong | $12.88 | $13.99 | $9.99 |
| Akon – Konvicted | $12.88 | $13.99 | $10.99 |
| Josh Groban – Awake | $6.88 | $6.99 | $11.99 |
| Various Artists – NOW That’s What I Call Christmas! 3 | $13.88 | $14.99 | $16.99 |
| Totals | $94.76 | $99.91 | $103.91 |
Note: The Beatles’ Love album is not currently available at iTunes, so it wasn’t included in the totals.
When you’re shopping for singles, iTunes is a great option.
When you’re loading up your iPod with popular albums, though, it’s usually cheaper to buy the physical CD and load it into iTunes than it is to buy the album from the iTunes store. You’ll spend up to 10% more to shop at the iTunes store, and not have anything tangible to show for it.
As usual with these things it doesn’t consider the variables…
All these retailers are deep discounting even more over the holidays… you don’t see those $6.88 prices the rest of the year, and it is only on a handful of titles… and guess what, they pick popular ones…
They sell these titles at a LOSS… there’s even very few at the 9.99 range… go outside of the top ten or twenty, and iTunes is a great deal indeed.
Michael – we picked the top albums because we thought that would most accurately reflect what people are spending money on.
You’re correct that some of these may be loss leaders – but that doesn’t invalidate the fact that these are the albums that people are most likely to be shopping for, and you’ll pay a premium to buy the “virtual” version of the albums.
I don’t mind paying a premium on my music to download it from itunes because I am saving gas, and time spent going to the store and shopping. It’s quick, fast, easy and fairly priced. And the less time I spend in Wal-Mart dealing with idiots, the better!