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Music Labels See Slower iTunes Sales Growth in Wake of Price Increases

Tuesday February 9, 2010 7:39 am PST by Eric Slivka
MediaMemo notes that Warner Music Group has reported seeing slower sales growth via Apple's iTunes Store since the introduction of variable pricing last year.

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.

According to the report, Warner CEO Edgar Bronfman, Jr. claims that the pricing increase has been a "net positive" for the company as it sees the music download business maturing, but acknowledges that raising music prices 30% during a recession may not have been a smart move.

Apple has continued to maintain a nearly 70% share of the overall digital music download market, and last year reached 25% of the total music market in the U.S. as customers continue to move away from physical CD sales in favor of digital distribution.

MediaMemo points to Warner's example as a warning for book publishers, who have begun leveraging Apple's iPad in dealing with major eBook retailers such as Amazon to gain greater control over eBook distribution and increase prices.

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