iTunes Sales Drop 65%

[lpxxfaintxx]

From the blog...

Sales at Apple's (AAPL.O: Quote, Profile , Research) online music shop iTunes Music Store fell off a cliff in the first six months of 2006, according to a recent survey.

Since January 2006 the number of monthly iTunes transactions has declined 58 percent, while the average size per purchase declined by 17 percent, leading to a 65-percent overall drop in monthly iTunes revenue, U.S. market research group Forrester said in a survey among North American consumers.

"It is too soon to tell if this decline was seasonal or if buyers were reaching their saturation level for digital music," Forrester said in the report that was published to its clients last week, and made available to Reuters on Wednesday.

Apple's iTunes Music Store is the most popular online music store in the world and Apple said it has sold over 1.5 billion music tracks and tens of millions of TV shows and movies.

The decline comes after a period of strong growth. The number of monthly iTunes transactions grew sevenfold, from just over two transactions per 1,000 households in April 2004, to nearly 17 during January 2006. Over that period, the average transaction size almost doubled, to $6.69 from $3.55.

Forrester analyzed 2,791 US iTunes debit and credit card purchases made between April 2004 and June 2006 from the research firm's consumer panel.

Most consumers buy just a few songs at a time, while the average is boosted by a smaller number of heavy buyers.

"Only Apple knows just how much profit there is at the end of the day on a $1.98 credit card transaction for two songs, but with transaction costs, hosting costs, and the wholesale price of the songs, there's not much margin left," Forrester said.

Of all online homes, only 3 percent buy music at Apple's music store, and of those most continue to buy most of their music on compact discs (CDs).

"Although Apple is the dominant leader in the digital music industry, the entire category of digital music made up just 4 percent of U.S. music sales in 2005," Forrester said.



Via Reuters.

[Zuneologist]

now i've never used iTunes because hell, i dont have an iPod and prolly wont because now I have a Zune.

my question is, can you only purchase songs one at a time at their price($.99 a song) ?
and can you keep them forever?

[lpxxfaintxx]

Yea. iTunes does not have a subscription service yet. Once you buy the song, you can keep it forever... BUT, only ipods/itunes can play them. Same thing with the zune.

[Leet Muffin]

Its so f*cking retarded that they have it set up like that... >

[Nothing2Prove]

y buy off itunes or zune market when u can use limewire or w.e for free?????

[ModSteve44]

Originally Posted by Zuneologist

now i've never used iTunes because hell, i dont have an iPod and prolly wont because now I have a Zune.

my question is, can you only purchase songs one at a time at their price($.99 a song) ?
and can you keep them forever?

IPod sales have doped because everyone has an Ipod and is a good product.

[lpxxfaintxx]

Originally Posted by Leet Muffin

Its so f*cking retarded that they have it set up like that... >

DRM my friend, DRM.

[yensed]

I think this simply has to do with the season. Wait till all the pre-paid iTunes cards go into action after the 25th.. For me, the reason I haven't bought anything recently is because everything recently Sucks! Ok, Not EVERYTHING, But most of the stuff.
--------

Originally Posted by lpxxfaintxx

BUT, only ipods/itunes can play them.

You can also burn your iTunes songs onto cd's as well... Then rip them to the computer w/o DRM.

[jonharrell]

There are programs were you can conver the iTunes music into an MP3 and keep all the info on it like the Title, Cover Art, etc.

[palmerdeville]

Sensational and incorrect media headlines... It's too bad you have to check online news sites for accuracy now. For example, the recent misquote from BusinessWeek stating that "of 1,725 adults surveyed, 58% of those who already own an iPod or other MP3 player said they'd consider buying a Zune in the next 12 months" which is a very different number than the actual quote "58% of iPod owners planning another MP3 player purchase will consider Microsoft's Zune." But, I've already covered that.

Now on to Forrester's research which produced the quote "Sales at Apple's online music shop iTunes Music Store plummeted in the first six months of 2006".

Forrester's research was based on 2,791 credit and debit records... 1.5 billion songs sold... Yeah, that's conclusive.

Piper Jaffray ran the numbers and disagreed.

Blackfriar's ran the numbers and disagreed.

Then one agency after another questioned the data and disagreed.

What was the result?
Forrester says ooops, and releases "iTunes sales are NOT plummeting! Press credibility, on the other hand . . ."

Before you buy into every press release, news story and research report - check the numbers, check the source, check the methods. In an effort to compete with online bloggers, well "Press credibility, on the other hand . . ."

[palmerdeville]

Originally Posted by lpxxfaintxx

DRM my friend, DRM.

How does buying DRM'd music from the Zune Marketplace or iTunes Store and burning them to CDs differ from buying the physical CD at the store?

Either way you will end up with the same physical CDs with identical usage rights.

Then again, you can buy 15 individual songs you really want from the Marketplace instead of buying a CD with 3 songs you want and 12 you don't. And, if they're going on your Zune, it saves you the step of converting them. And, you can get it anytime of the day - instant gratification.

Then, based on the Fair Use laws, you could rip your CD back into your computer just as you could a store-bought CD. So, DRM is no more restrictive than a store bought CD. For $9.99 (album price) plus $0.50 (Blank CD) you have the same album that would cost you $13+ at a store. Plus, you get to save on fuel and time.

Again, with the ability to burn DRM music to a CD, which is identical to the store bought CD, where's the difference? And if you're going to say quality, I agree. But, we were talking about playback limitations.

[ipodsrbetterthanzunes]

i think this story is a load of bullcrap. this company who did the survey (forresters) is the same company that had the crap article saying that no one listens to podcasts(www.twit.tv/49). why don't they go and ask apple, they just said that their itunes sales weren't declining. why should you trust a survey?

although i'd love to see a subscription based itunes as i'd immediatly get it because i've only got around 1200 songs on my 20GB iPod

[crimsonwolf]

Isnt that bad for the Marketplace too?