The Infinite Dial

EMI, Sony, Warner Music and Universal Music Group, the four largest record companies, have been in talks with Apple to enhance the included content that comes with digital albums purchased from the iTunes store. Possible additions may include photographs, video clips and lyric sheets.

In this latest effort to boost sagging album sales, they are hoping to lure in consumers who are otherwise interested in just the singles. According to Nielson SoundScan, sales of albums in digital formats have increased 19% to 39 million. But sales of CDs have suffered a big blow, dropping from 179 million units last year to 141 million units this year. The drop is attributed to more people buying only singles.

Those that really want the "extras" that come with CDs would be able to get them if this Apple deal goes through. Both sides are hoping that this pool of former CD consumers will migrate to iTunes and rethink the value of buying a whole album instead of just a single. However, there are two kinds of people who still buy CDs: those that are not tech savvy with online apps and gadgets, and those who would consider themselves purists and collectors. Is additional digital content a big enough draw to bring either of these groups in? While it seems like a win-win for Apple and the record companies, I think the success will depend largely on a few key points:

First, those that do prefer to have the lyrics, liner notes and other extras likely seek them because they have a collection or a shelf full of CDs that they showcase. Many of these same people have a basement full of vinyl--and are proud of it. These are the music lovers, the "connoisseurs" who put the new disc in, sit back and read the CD jacket while they listen to the new tracks. Is it satisfying for them to have all the goodies in digital format, or will they still prefer to hold it in their hands? Chances are it will be the latter.

As for the CD buyers who do so out of need, they must create a new media habit. Until they take the plunge and head online, they will likely continue to purchase only CDs and will do so less and less because of the hefty price tags. The labels (and Apple) will certainly need to address the price point issue and show these consumers that digital albums are considerably cheaper than the traditional. I'm not sure if that will be enough to force a new media behavior change on someone, but it is probably the best place to start, especially in this economy.

For this arrangement with Apple to work, the ad campaign will have to be big and tackle the cost issue along with the value added from the bonus material. Apple would be wise to tie in the ease of use aspect as well to help attract those online hesitators. This is currently being addressed by their competitor, Sansa, who rolled out SlotRadio (a simplified music player with pre-loaded content) this past Spring. They too have partnered with record companies to include bonus content on the slot cards that contain the pre-loaded music.

No matter who they are targeting, Apple should add the extras without increasing the current costs of digital albums. This will take some wheeling and dealing I'm sure, but consumers need to feel that they are getting more for less, or in this case, at least more for the same. But the genie of lower music prices--especially online--is difficult to put back in the bottle once its been let out.