Upon further review, perhaps the music CD's demise is at hand.
The top-selling album on Apple's (NASDAQ:AAPL) iTunes store this past week belonged to Sara Bareilles.
If the name doesn't ring a bell, don't feel bad. The up-and-coming singer is still pretty obscure, topping the digital sales chart even as 44 other CDs outsold her Sony (NYSE:SNE) debut on the mainstream Billboard list of the weekly best-sellers.
So what is it about Bareilles' tunes that are music to iPod-earbud-donning ears? Even though digital album sales are accounting for just 10% of all album sales this year, roughly 80% of the young singer's sales came through Apple's online store.
Sure, she's good, but it's fairly obvious that Apple's new variable pricing strategy played a key role in catapulting her up the chart. Since its inception, iTunes has been selling digital albums at $9.99 apiece. That changed this month, when Apple began to aggressively price albums by new artists like Bareilles' Little Voice at $6.99.
Sure, this is the way they do it in the real world. Major labels often turn to Best Buy (NYSE:BBY) and Circuit City (NASDAQ:CC) to promote musical upstarts at attractive price points. However, Apple's decision to price some albums for as little as $5.99 may send ripples through the industry.
The compact disc isn't doing so well as a music format. Nielsen SoundScan is reporting that CD unit sales fell by 19% through the first half of the year. It's bleak, but I figured that the digital industry that is priced to move singles at $0.99 -- and most albums at $9.99 -- could live harmoniously with the album-oriented CD market. Variable pricing will change that, especially if consumers continue to belittle the value of an entire album of work.
If anything, Apple suddenly feels a lot more important in shaping music consumption habits. Bareilles needed just 14,000 album sales to claim the top spot on Apple last week. Compare that to the CD space, where earlier this year, the Dreamgirls soundtrack needed 60,000 units to rule the chart for a week. A little promotional nudge by Apple can go a long way.
In case it wasn't obvious by now, Apple is the new power broker in music. Little Voice? Hardly.
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Longtime Fool contributor Rick Munarriz once had his band signed to Sony's Columbia Records label. It didn't exactly pan out. He does not own shares in any of the companies in this story, save for Disney. He is also part of the Rule Breakers newsletter research team, seeking out tomorrow's ultimate growth stocks a day early. The Fool has a disclosure policy.
