Talk about turning traditional wisdom on its head: Apple has done a
better job than even Walmart at delivering lower prices to millions of
shoppers!
Apple's approach to music, games, and applications saves consumers
money every year.
Before Apple released the iPod,
CD prices rose from an average of $13.04 in 1999 to $14.19 in 2001.
The iPod came out in October 2001, and
by 2004 the average price of a CD had dropped to $12.95. Prices
were no longer increasing - how could they when you could spend less
than a dollar and get the one song that you liked from the album?
Even if you wanted the whole album, at 99¢ per track you could
buy an album with 10 songs or less for under $10. If
an average album has 12.26 songs, you would pay $12.14 on average
for an album.
That's still less than the $12.95 average in 2004.
What would have happened without Apple?
Inflation from
2001 to 2009 was 21.2%, so unchecked, the average CD price might have
increased to $17.20. Compared to that, Apple saved you $5 per album by
lowering the price to 99¢ per song for a 30% savings.
Sure, the price of a single has changed, and Apple now has three
prices: 69¢, 99¢, and $1.29.
I checked iTunes Top Hits list, and this is what I found. The album
price for the artists with the top three songs were as follows:
- Taylor Swift, Fearless, $11.99
- Ke$ha, Animal, $9.99
- Justin Bieber, My World, $7.99
Although buying just the hit single will cost you more than it used
to, the price for a new album is less than the average CD price was in
2004.
What about Walmart? Don't they match or beat these prices?
Yes, they beat prices - often by as little as 3¢. This shows
that Walmart is following Apple's lead, not taking the lead. Where the
prices on iTunes have gone down, Walmart has dropped to beat them by
three measly cents. Not exactly what I call the price leader, and
considering the cost of gas to drive to the store, not exactly savings
worth chasing.
Apple is the clear consumer champion here.
What does all this translate into for total savings? According to
Nielson SoundScan, in 2009 there were 373.9 million albums and
1,159 million downloads (94 million albums at 12.26 songs/album) =
468.4 million CDs. Using a $5 per album saving, that is $2.3 billion
saved.
Those numbers can't include iTunes, which sold more than 2.5 billion
downloads in 2009 according the
Wikipedia. That's an additional 203.9 million albums, for an extra
$1 billion in savings. The total effect is to save consumers $3.3
billion a year on the price of music.
Thanks Apple. You guys really know how to save us money.
