Welcome to Rye Country Day's Economic Blog. Here you will find perspectives by students taking Economics at Rye Country Day School. It is meant to be a forum where students can openly express their ideas and take positions on relevant economic issues. I urge everyone to participate in presenting their own ideas in an open manner so that we can all learn from each other. Regardless of whether you are currently taking Economics, everyone is invited and encouraged to comment on articles and get involved. Feel free to e-mail me, Alex Osborne at alexander_osborne@rcds.rye.ny.us , with comments or suggestions.

Wednesday, January 17, 2007

Featured Entry - The Rise of Itunes

The impact of Itunes on the music business has been heavily felt. More and more people are flocking to Itunes for easy attainability of the latest music, the lower product prices, and the added bonus features which come along with the music. I can’t remember the last time I actually went to the store and bought a new CD. If I go to a store for music, it’s to buy an Itunes card. These cards allow you to purchase a variety of music rather then be locked into one artist. Albums on Itunes normally cost twelve dollars. This is two dollars less then a store bought CD would cost. This leaves you with three dollars left over on your card which you can use to buy three additional songs or just save for later. The left over credit is exactly what the Itunes Company wants because people will buy more songs then they would if they were to only buy a CD. However, music stores such as Sam Goody suffer greatly from the rising popularity of Itunes. The one in Rye just closed up due to lack of customers. Maybe it wasn’t totally due to the emergence of itunes but that store lost a lot of customer creating a surplus of product, which in turn generates less income for these music companies. Itunes eliminates the middle men which in this case are the Music Stores, creating more profit for the artists and giving the consumers what they want for lower prices.

-Josh Anderson


Ivan K. said...

Those iTunes cards are definitely very convienient and having the money from them on iTunes makes it very easy to spend all of it in a hurry. The sheer selection of things that are now offered on iTunes really makes it difficult to maintain any of that money, especially when you got the card as a gift, because there always seem to be new things that you may want, and the "Just for You" section seems to quite accurately offer you music that may interest you. However, I still find that sometimes I will go out and buy a new CD at the store simply because I want some physical sign of owning it, rather than just having 12 music files somewhere on my computer. I believe that one reason why some music stores are still open is that some people just can't shake their materialistic temptations.

Alex Osborne said...

I agree with Ivan, you do not feel as if you own a CD by clicking Buy and downloading it in 30 seconds. That being said, gift cards are great for companies as I read somewhere that nearly $8 billion in gift cards will go unused/wasted in 2006 alone. That is pure profit for companies issuing these cards as consumers pay upfront for these cards and if they are never redeemed the company is getting "free money" For Itunes i would be inclined to say it does not occur as often as for store cards or credit as itunes is really easy to access and use but for stores people might forget or just never need to go to the store and never redeem the gift card.

Will Hilbert said...

Itunes is much more cost saving to the consumer, but not to the producer Before Itunes online store, buyers had to buy a cd, and usually they bought the cd to listen to that one hit. The buyer payed 15 dollars to listen to that one song. Now a buyer only has to pay 99 cents. It is a tradeoff because artists are obviously not making as much money. Besides classic bands who buyers who want to buy a whole cd on itunes, most buyers just buy that one hit off the cd. Because lets face it a majority of popular songs come off cds that that very poor other songs. The only real advantage is to the producer(artist) is that itunes is much more convenient to a buyer and itunes creates a much easier process to buy a song. Buyers only benefit from itunes, while the artists lose more than they gain since before itunes online store

Marianna said...

I don't really think iTunes is what is hurting the music industry. Although buying a whole CD is a few dollars cheaper than it would be at the store I don't think that is significant enough to really hurt the music business. If iTunes is hurting anyone it's the actual music stores such as Coconuts or FYE (just to name some in the area). Those stores aren't making as much money as they used to because now there is an alternative to the product they offer (buying it from iTunes). People prefer iTunes for the reasons you stated, Josh. They are free to chose a variety of songs and don't have to purchase the ones they don't like/will never listen to. (I'll be honest and say right now that I didn't finish reading the original post before I commented so I pretty much agree with you that it's the music stores that are in trouble). I think the music business is in trouble because of things like Limewire and Kazaa where people don't pay anything and can get any song they want for free. I feel like iTunes was a step forward for the music industry and is ultimately helping it become more lucrative but unless the ability to download music for free goes away record companies/recording artists will never make the same amount of money they used to from CD sales.