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iTunes Sales 'Collapsing'
Alien54 writes to tell us The Register is reporting that based on reported revenues this year iTunes sales are plummetting. From the article: "Secretive Apple doesn't break out revenues from iTunes, but Forrester conducted an analysis of credit card transactions over a 27-month period. And this year's numbers aren't good. While the iTunes service saw healthy growth for much of the period, since January the monthly revenue has fallen by 65 per cent, with the average transaction size falling 17 per cent. The previous spring's rebound wasn't repeated this year."
From the article:
Speaking to The Register, Forrester analyst Josh Bernoff warned against extrapolating too much from the figures. It may reflect a seasonal bounce that hasn't yet manifested itself. However, it might not.
So maybe there's something going on... maybe not.
More than that, The Register is not exactly a trustworthy news source. Think of it as the supermarket tabloid of Technology News. I wouldn't be surprised to see something like 'Steve Jobs an Alien Lovechild' on it's front page.
After reading TFA, I'm not sure if what they're deducing is actually real or not. But I can tell you this - when I can get a real CD on Amazon for $10-12, and it costs me exactly that for a noticeably lower-quality digital-only version of the same album, then I see no reason to buy from the ITMS. I don't pirate music; I buy what I want... and the vast majority of my purchases these past three years (the time period over which I've owned an iPod) have been in the form of CDs.
The bigger question, though, is this: Does Apple really care? ITMS can't be making them any sort of profit compared to iPod sales; and iPod sales are still going up. All in all, Apple seems to be enjoying a healthy bottom line.
#DeleteChrome
No, this is just some bad data. If "secretive Apple" isn't publishing data, where do that get it from? Oh yeah, Forrester...
*crickets*
I'm probably missing something and that's okay. Because you can analyze numbers to your hearts content, the point that all the "analysts" are missing is that most of the DRM'd music that's been released is backcatalog, plain and simple. Did it ever occur to anyone that many people probably splurged on legal tunes that they already loved and owned to get it onto their iPod (or whatever). Now that they have all the favorites/classics/etc., there is no reason for them to keep pace with whatever of the 70% crap that the industry pumps out.
Maybe the industry is just slowed down while they wait for Brittany, Nickelback and whatever shitty country singer to release their new album? Stop thinking that small decline in numbers means THE INDUSTRY IS DEAAAAAAD. It's ridiculous.
I just wasted your mod points! HA!
Did it ever occur to anyone that many people probably splurged on legal tunes that they already loved and owned to get it onto their iPod (or whatever).
Why would anybody buy a song they already own on CD???
Ripping a song from CD to either AAC or Apple Lossless is faster than downloading via a typical broadband connection.
iTMS is awesome for a very specific purpose: 1-hit wonders.
Anybody who makes an album of consistently good music, I'd rather hunt down a used CD and rip it to a Lossless file, but if I only want one or two songs from a particular artist ever, and I'm not too fussy about hi-fi sound, then $1 per song is a good deal.
Information wants to be anthropomorphized.
Wait, you want them to make a player you can afford, and you still want to say "screw 'em" if you can't easily take your music to a competitor's player? Doesn't sound like you're giving them an incentive to do either.
This sig intentionally left justified.
Don't forget that the author of the article is Andrew Orlowski. His particular axe to grind is that he wants all of us to pay for digital music via a mandatory flat licensing scheme. That is, all of us would pay a bit (or a lot) extra for our broadband access and that money would be used to pay artists, publishers, etc. Thus, I'd take any predictions he makes about iTunes collapsing as either A) wishful thinking on his part or B) an exaggeration of what Forrester really told him.
correction: low-fidelity 128-bit AACs, which do actually sound a bit better than 128-bit MP3s. And using my cassette adapter into the stereo of my 10+ year old car, cruising down the bumpy road at 50+ mph with my AC going full blast, I'm guessing I'm really not going to miss any frequency loss from the source material.
This sig intentionally left justified.
Who the hell is Forrester & how have they had access to Credit Card transactions for 27 months ?
Where the hell did my tinfoil hat go ?!
Wanna fight ? Bend over, stick your head up your ass, and fight for air.
Sales are down since January, hmmm? Gee, I wonder what happens in January... Could that be the month that huge numbers of people who received iPods for Christmas try out the iTunes store for the first time? How about waiting a month and comparing January to January figures before drawing conclusions about a "collapse"?
For reasons earlier posters have done an excellent job of outlining, I'm skeptical about the article and its methodology, but even if they're correct is the situation really a grave concern for Apple? The (barely profitable) iTunes Music Store exists to sell (highly profitable) iPods, not the other way around. As long as iPod sales are healthy (and apparently they're very healthy) the effects of "collapsing" sales at iTMS would be secondary or tertiary concerns for Apple's digital music player business. Apple's big wins from the iTunes Music Store come through FairPlay DRM lock-in and influence in the music industry, neither of which is yet affected by these supposedly "collapsing" sales figures.
Concerning iTMS, my theory is that CDs are so cheap (or rather iTMS et al are so expensive) that there is little incentive for people to download songs. $9.99 for an album really is a scam when often it is on Amazon on CD for $9.99 and sometimes less. It's easier to buy and rip the CD. A CD that you then own forever.
I have a nasty suspicion that a *lot* of people are technically ignorant to the extent that they believe buying it on iTunes is the only option to get it on to their iPod -- or that it is, in fact, faster.
.. ah, you get the picture.
In fact, building on your point about "hunting CDs down", I'd have to say that given the scenario where you want one favourite track of an old CD, and you know the CD is down in a box in a cellar, and you can't wait and you must have your music now (because you are a true child of the modern world and listening to music all the time wherever you are is a god-given right), then downloading that one track off iTunes is almost certainly faster than finding that CD in the box in the cellar, bringing it upstairs, ripping it
-- Despair is an operating system that ANY human being can run, sort of a psychological JAVA --
I wont speculate on iTunes sales as the method the data was collected was sketchy. I will say that there are three reasons I see why their sales might be dropping other then just seasonal variation.
.AAC collection at 1$ a hit.
Vendor Lock / DRM:
Why on earth would I pay hard earned money for a music format that locks me into a single vendor? iPods are spiffy and all, but your music collection becomes junk if you change to a non-Apple MP3 player. Yes, there are ways around this, but none of them are simple and easy lossless conversions. People are starting to see new MP3 players come out to compete with the iPod. Perhaps they are taking a second look at their music collections and asking if they want to be tied at the hip to Apple?
Pricing Scheme:
Other online music services offer alternative pricing schemes that might be eating into Apple's business. Rhapsody has an 'all you can eat' service for $15 / month. The music dies if you stop paying, but until then you get to pick from millions of song for the price of one over priced CD a month. For people who want to explore lots of music cheaply and don't feel an overwhelming urge to collect and horde music, this is a steal. iTunes offers nothing to 'explorers' who don't want to break the bank. Download every song written by the Ramones on a whim with Rhapsody and you pay the same subscription fee you always pay and think nothing of it. Do the same on iTunes and you are out $150 and just made a major purchase. iTune's pricing plan works for some, but not all. Their inflexibility to alternative pricing models might be costing them people that are looking for something other then a
The Long Tail:
I would be utterly not surprised to learn that online shoppers are go for back order items rather then Top 40 songs then 'normal' music consumers. If this is the case, then iTunes has a problem. Online shoppers are probably consuming back order items faster then new back order items (that people actually want) are created. If I decide that I just love 1990's Ska, at some point I am going to download all of the good 90's ska that there is. Top 40 is not going to make any new songs to replace this, so I will simply stop downloading. Consumers might be 'filling up' on the back order songs that they wanted and not finding anything new to continue consuming.