iTunes: the preferred plastic
As gift cards become both more popular and more commonplace, one seems to stand out. It's a gateway to 10 million songs.
A gift-giving riddle: At a recent gift exchange, 16 of the gifts were the same. The participants were 7 to 71 years old, male and female, representing a mix of interests. With the opening of every gift, all individuals were thrilled. The gift was not cash. What was it?
Answer: An iTunes gift card, also known as a little, shiny burst of delight.
Certainly, the appeal of gift cards has risen in recent years. During the 2008 holiday season, consumers rated gift cards No. 1 on their holiday wish lists, according to the National Retail Federation.
But even as the popularity and ubiquity of gift cards grows, the iTunes card stands alone. It has become the go-to item for every giver, every recipient and every occasion.
"There's no doubt that iTunes is a pretty unique player among gift cards," says Peter Fader, a marketing professor at the Wharton School of the University of Pennsylvania.
Surely it's a safe bet that cash and most gift cards will be used by the giver. But iTunes cards seem to be chameleons among gift cards - taking on whatever characteristics the giver or receiver wishes upon them. They are at once sophisticated and youthful, providing a future experience, an emotional connection, and a token of intimacy. That's a lot of gift-giving mileage from a little piece of plastic.
While there has been some backlash toward gift cards in general - some people say it's no more thoughtful than giving cash - those cards with the silhouetted dancer with the telltale white earbuds seem to be immune to any anti-gift-card 'tude. In fact, while Americans cut back on spending overall, and the music industry in particular has seen sales decline, iTunes cards and digital downloads remain a bright spot.
"Are gift cards really personal? No. But iTunes seems to be different than other gift cards for people because it's music," says Deirdre Flint of Philadelphia, herself an independent musician, with 29 downloadable tracks in the iTunes store.
Sure, a $50 Dick's Sporting Goods card may get you closer to that North Face jacket you wanted, but a $15 iTunes card could buy 15 melodies (songs typically cost 99 cents) that have been bouncing around in your head - arguably 15 unique gifts to enjoy and associate with the giver.
"Listening to music is fundamentally an aesthetic process and something you consume in an emotional way," says Patti Williams, an associate professor of marketing at the Wharton School. "Music is a deeply experiential good - an emotional experience you may not get from something a little more utilitarian, like shoes."
Consumers agree. Listeners have bought more than six million songs from the iTunes store since its inception in 2003. And it is estimated that 36 percent of all iTunes purchases are made using gift cards (for teen consumers, the number climbs to 61 percent), according to a recent study by the consumer market research firm NPD Group. Last year, iTunes surpassed WalMart to become the country's biggest music retailer. And it's not just tunes anymore. In addition to the 10 million songs available in the iTunes store, there are more than 30,000 television episodes and more than 3,000 movies for sale just a few clicks away.
"The amount of self-expression that is tied up in a person's iPod is remarkable, from the actual iPod itself to the music that is on them. No two iPods are the same," Williams says. "And by extension, the iTunes gift cards allow for this sense of self-expression that other gift cards don't."
In addition to the emotional appeal of music, there is something to be said for the "coolness" factor of Apple and all of its products. When gift cards from seemingly any retailer or restaurant can be bought alongside a bag of beef jerky at Wawa, that hip vibe of the Apple card often makes the difference. Giving an iTunes card doesn't just say "Happy Birthday," it says, "I think you're chic, you're now, you're wow."
"iTunes should definitely be given credit for being an innovative gift-card issuer," says Talbott Roche, of Blackhawk Networks, the nation's largest prepaid card provider, with 250 brands available in gift-card malls in 83,000 stores such as Genuardi's, Wawa and CVS. "They have increased their appeal with cards that are either occasion- or recipient-branded. They take that next step and make a gift card personal."
There are cards that look like ornaments or birthday packages, and even cards whose purchase helps fight AIDS in Africa.
The cards - which come in denominations of $10 to $100 - are given to teachers, babysitters, coaches and colleagues. Whenever it seems that the most-appreciated gift is likely to be cash, it often gets translated to the next best thing - an iTunes card.
John Owens, head of marketing at the Wilmington-based online bank ING Direct, has given iTunes gift cards to staff during the holidays, and vendors have received bright-orange iPod Shuffles and iLuv docking stations at company-sponsored events. "Our brand is perceived as being a little more cutting-edge than most banks, and being associated with something unique like Apple products says something about ING Direct and what we do," Owens says.
Meg Girton, an eighth grader in Wayne, has received the cards for Christmas, her birthday, in an Easter basket, and on Valentine's Day. "I got $45 in iTunes cards from my aunt because a little birdie told her that Santa was bringing me an iTouch."
That card brought her current stash of iTunes gift cards up to 13 – totaling $205. But alas, when you are 13 years old, more is never too many. House rule stipulates that she can make iTunes purchases using only gift cards, not cash or allowance. "I'm never thinking, 'Oh, another iTunes card,' because I know I will use it."
The middle schooler also loves the fact that the cards can deliver instant gratification - with no need for a driver's license or a ride to the mall. "You can just jump on the computer, browse, shop, pick up a couple of tunes and create a playlist - and that's all before the bus comes."
She also likes to give iTunes cards as gifts herself, recently tucking a card in a Vera Bradley wallet as an extra surprise for a friend's birthday.
"There are girls who would rather get a Juicy jacket, but if you understand Apple, iTunes, and you get the whole idea, then you would definitely love to get an iTunes card," she says.