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Music Business

iTunes Preparing For Broad Latin American Launch

December 01, 2011

By Leila Cobo (@Leilacobo), Miami

Following its successful foray into Mexico, iTunes is preparing to launch in other Latin American countries by year’s end or by the first quarter at the latest, say sources familiar with the conversations.

An iTunes spokesperson declined to comment, but a wide array of executives from different areas of the music industry say the retailer will definitely open shop in Argentina and Brazil and probably in several other countries in the region. Some sources say the Brazilian store will be open as early as mid-December.
iTunes has been negotiating separately with publishers and labels and no doubt its success in Mexico-its first Latin American market-helped propel the decision to expand into other Latin countries, beginning, sources say, precisely with Brazil.

In Mexico, prior to the advent of iTunes in 2009, the online music market was virtually inexistent even though there were online music stores. But in 2010 there were nearly 13 million tracks sold online, according to Mexico’s association of record producers (Amprofon)–a 116.3% increase over 2009-with most of those numbers coming from iTunes. For the first six months of 2011, digital sales-propelled in large part by the iTunes store-grew by  7.7% in the first semester of 2011, according to Amprofon,  compared to 2010–even as physical sales went down 11%.

“This is positively indicative that the more options people have to access music legally online (through downloads, streaming and subscription services) the more they will do so, the illegal file-sharing will decrease and, if managed well, the true value of music will grow,” says Robbie Lear, managing director of EMI Mexico.

Although many other Latin countries have seen its digital sales increase over the last several years, those sales come primarily from mobile devices, as there is no truly successful online music store in the region. The one exception is Brazil, where digital music sales for the first six months of the year, according to IFPI numbers, stood at a wholesale value of $22.1 million and saw 2% growth compared to the previous year. Perhaps most important as far as iTunes is concerned, Brazil has shown its willingness to buy music online, with most of its digital track sales coming from online sources; by some estimates, the Sonora subscription service alone has some 500,000 paying subscribers.

“It’s a digital market that is growing and has an interesting revenue,” says Alejandro Duque, director of sales and business development for Universal Music Southern Cone. However, music fans “definitely don’t consume with the frequency they could if they had direct access to music in their devices.”

Even though no one knows for sure when and where iTunes will open, the possibilities go beyond immediate sales.

“As an independent, any means of distribution that is dependable and user friendly is always important for us,” says Tomas Cookman, president of U.S.-based indie Nacional Records. “Although a very key and financially rewarding touring market, Latin America was a hit and miss; there is only so much product that our indie partners can work at any given time and the majors of course have their hands full with their own region wide repertoire. With the launch of iTunes Latino and the growth of its penetration, we will be including the rest of Latin America back into our contracts more and more.”

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