snapshot 2/5/08

Apple unveils higher capacity iPod, iPhone models
Apple Inc on Tuesday introduced models of its popular iPod touch handheld computer and iPhone with double the memory available in previous versions. Apple, which said in January it had sold more than 4 million iPhones since sales began last June, says the iPhone will now also sell with 16 gigabytes of memory.

The iPod touch, a wireless touch-screen device that plays music and videos, adds a 32 gigabyte model. Both devices will sell for $499, Apple said. Apple will continue to sell its iPhone with 8 gigabytes of memory for $399, and two lower-capacity versions of the iPod touch, 16 gigabytes and 8 gigabytes, for $399 and $299, respectively.


Sales Bath Continues In January, Double-Digit Declines
The recording industry tailspin continued in January, a development that places more pressure on label reinvention plans. The month featured a 10.3 percent year-over-year decline in album sales in the United States, a drop that falls below an already-depressed 2007. For the period ending January 27th, cumulative album sales topped 30.6 million, according to figures released by Nielsen Soundscan.

As usual, the digital story showed gains, though growth rates are slowing. During the month, downloads increased 28 percent over the same period last year. That represents a more subdued gain over previous periods, and suggests a possible sales plateau ahead. In 2007, downloads increased 45 percent to 844.2 million units. Meanwhile, CD-specific sales were positively scary in January, dropping 15.9 percent to nearly 25.5 million units.


Reble, Reble, I Like Your Playlist
Reble is a scrappy YCombinator startup. The software is built on the Jabber open-source instant messaging platform You are basically IMing with your friends and hooking into their iTunes or other music library. You can only see the music of friends on your contact list, and can only stream a song if no one else is listening to it at the same moment. It is a one-to-one system.

But the more friends you invite, the bigger the music library that you can access. The software only works on Windows machines right now, and only streams DRM-free MP3s. Eventually, it will let you buy songs that you like from digital music stores like iTunes or Amazon.


...And Then There Were Two
...er, actually, three. That is Rhapsody, Napster, and Microsoft as the remaining major players in the on-demand subscription music service business. This deal more or less mirrors what Napster and AOL did, and Rhapsody and MTV did, not all that long ago. Jupiter remains as bullish as anybody on these services, which are awesome products that, so far, only appeal to a niche audience of music aficionados. We're projecting the $235M market (US, 2007) will grow to $600M in 2012, but we did lower our forecast a bit, as the business has remained sluggish and we've learned more about customers who subscribe. That forecast is in comparison with $1.1B in US downloads projected to hit $2.8B in five years.

Yahoo hopes to migrate its customers -- we estimate several hundred thousand -- over to Rhapsody during the first half, and will offer pro-rated refunds if necessary. SanDisk's very cool WiFi Sansa Connect device for YMU is history. While the potential of Yahoo's marketing clout behind the Rhapsody service is there, I've got to admit it didn't make YMU a leader. Yahoo did a few TV ads and plenty of promotion on its Music web channel -- which continues to be a great, ad-supported business for Yahoo -- before it soured on the subscription business and decided to narrow its focus. The proof will be in the execution of that joint marketing, and in integrating other Rhapsody services into Yahoo Music (and vice versa, if it makes sense).