iTunes, which celebrates its tenth anniversary this week, has transformed music retailing in the decade since it launched and pushed forward customer analysis in the process.
Ten years ago, with the music industry seeking to monetise the boom in digital music, iTunes launched on a unique platform: it had broad support from all the major labels. Its legacy has permanently shifted the state of retailing.
Napster, the illegal file-sharing website, had been dispensed with in the courts but the illegal sharing of MP3s would only grow. Our Digital Music Index, published last September, showed over three billion songs had been shared using Bit Torrent during the first half of last year alone.
Over the decade iTunes has grown to become the world’s leading music retailer – combining a user-friendly consumer experience and industry-friendly fee structures – there has been a notable decline in physical sales.
Fundamentally, the popularity of mobile phones or MP3 players as people’s primary means of music consumption has driven structural change in retail.
As music has become more of a mainstream ‘product’ we’ve seen substantial polarisation as record stores become hubs for specialists while supermarkets carry only the top chart titles.
As recently as 2007, record stores accounted for 80% of music sales worldwide according to NPD Group, a consumer research firm. They now account for just 64%, a figure that gets lower in countries with good access to Wi-Fi and digital music services.
But at the same time, Musicmetric’s own data hints that piracy is slowing in countries with access to iTunes and streaming services like Spotify or Deezer. People it seems, want to do the right thing.
Admittedly this offers little respite for many record shops that have hit the buffers. But just as travel agents and retail giants like Jessops and Comet have come unstuck through internet competition, changes in shopping habits were always going to occur.
The point is that it wasn’t iTunes’ fault. Apple simply did what it’s always done and caught the crest of the wave at the right time.
If the likes of John Lewis can evolve and seize the opportunity of online retailing, then so can others.
Of course with music it is fundamentally different in many ways: the lucrative physical singles market doesn’t exist, but on the upside, with emerging markets coming online, massive new audiences are opening up for artists. And these opportunities could never be accessed through conventional routes.
We work with labels and broadcasters to help them aggregate and analyse file-sharing, streaming and social media data. They can then use that to make better business decisions. If you know how Twitter or Facebook promotions combine with festival appearances to drive sales, for example, you can plan more effective campaigns.
Moreover, big data can potentially open up a whole world of consumer insight in retail that never previously existed. That’s one legacy that will benefit everyone.
Marie-Alicia Chang is co-founder of music trends analysis firm Musicmetric