iTUNES ALBUM DOWNLOADS SURGE

Meanwhile, Physical Album Sales Slump in Stores

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YORK, Pa. (AdAge.com) -- Digital music is being blamed for the death of album sales, but Apple is doing a brisk business in online album downloads. Its iTunes is offering exclusive songs, digital booklets and added tracks as bonuses for consumers who buy iTunes albums, marking them with a special “iTunes Version” tag.
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Apple vs. record stores
“While the record labels whine about losing album sales, Apple is selling albums. Apple is proving albums are popular -- they’re just not popular at stores,” said analyst Richard Doherty of Envisioneering Group.

In Apple’s self-published list of top albums for 2005 released this week, two of the top 10 are iTunes albums, including No. 1 “The Breakthrough” by Mary J. Blige. (The other is “Christmas Songs” by Diana Krall.) Apple could not be reached for comment; its corporate offices are closed this week.

37 albums
While it’s not clear when Apple started to deliver “iTunes Version” albums, all but one of the 37 iTunes Version albums listed for sale on its site debuted after March 2005, with the bulk launched this past fall. “The Breakthrough,” in fact, debuted Dec. 20. Its extras include two songs and an interactive booklet not offered for individual sale and only available with the album purchase. Billy Joel’s “My Lives” not only offers extra tracks, but also a bonus video download of Mr. Joel performing “Big Shot” in concert.

Apple is not the only online purveyor experimenting with online album bonuses. Sony offers its own artists exclusively in its “Connect Sets,” sort of mini-albums at a discounted price, and Wal-Mart offers exclusive versions and bonus tracks on a few of its downloadable albums. Still, Apple is definitely the 800 pound gorilla when it comes to digital music sales.

Listening to consumers
“Apple and other [digital music companies] are actually listening to consumers and asking what they want and giving it to them. I’ve never had a record label ask me what I want,” Mr. Doherty said. “Artists are taking notice too. ... Apple listens to artists much better too, and many are saying they want to work with Apple.”

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