Six Months Later: 'iTunes LP' Format Performance Remains Lackluster

GigaOM provides an interesting reexamination of Apple's "iTunes LP" format for enhanced album content six months after the format's debut. While iTunes LPs were touted at its launch as a means to reignite sales of albums as opposed to individual tracks, Apple has done very little promotion of the format in recent months and currently offers only 31 iTunes LP albums (plus three comic book/single packages using the format) in its U.S. iTunes Store.

Reports leading up to launch of iTunes LP, previously codenamed "Cocktail", had suggested that the idea had been put forward by the record labels but was rejected by Apple until the labels banded together to begin developing their own similar format. GigaOM's report yesterday offers a similar perspective on those developments, which offers an explanation for Apple's lack of promotion of the format.

But I'm told by an industry source who preferred to remain anonymous that iTunes LP wasn't Apple's idea in the first place. Rather, it's the result of the same renegotiations between Apple and the major record labels that yielded DRM-free songs and flexible pricing early last year, a concession by Cupertino to make a gesture in favor of album sales as consumers increasingly show a preference for digital singles.

According to the report, Apple even subsidized the initial iTunes LP productions at a cost of up to $60,000 each, presumably as a gesture to placate the record labels. Record labels are understandably reluctant to foot the bill for new releases at that price, despite the fact that Apple's initial promotion of the format did allow the releases to become profitable.

Apple claimed last October that it would be opening up the format to additional labels and did publish tools to assist developers in creating iTunes LP projects relatively soon after. But while developers are likely to be able to put together such releases at a cost significantly below that invested by Apple in the initial launches, few have yet to express interest in the format.

As the report notes, many artists have chosen to take advantage of Apple's App Store to offer enhanced content, but Apple's iPad may provide another opportunity for the iTunes LP format to gain some traction. For its part though, Apple has yet to tout the potential of the iPad for iTunes LP content, and artists and labels have yet to become excited by the possibilities available in that combination.