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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."
I feel like this is the same story as "CD sales are declining!" The whole time you've heard that in the news for the past 6 years, physical CD sales for small independent artists has shot WAY up.
It's like you were looking at one of those stock charts that compares two different companies' stocks. The big famous artists would be that stock whose value has fallen from $100/share to $70/share. But the independent (mostly unknown) artists are like a $1 stock that is now at $5. It's more newsworthy to talk about the big visible stock falling, but the real story down here is in the huge boost that the indies have gotten from improved distribution / availability.
Check out this visual / geographic metaphor, too.
Beef.
Dan East
Better known as 318230.
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.
I buy my iTunes by trading shells and trinkets.
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.
When there was only the iPod as a really good portable player, iTunes was the only game in town. Now when you can get decent quality alternatives, interoperability is becoming a much bigger issue and DRM is like a doorstop not letting anyone in.
And when people can't get into a particular venue, they'll look elsewhere. And science bless the internet, there's a lot to choose from these days.
Zoom Player Lead Dev.
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.
I use a gift card. Is that tracked like the credit card sales?
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.
Must be a slow news day in the UK, I guess...
...it doesn't. Movies, TV shows etc . are also part of the menu, so much so, that some are wondering how much longer Apple can call it the 'iT Music Store'.
By reading that article (burn job de' jour), and most of the comments here so far, you'd think iTMS only sells music. Man - talk about tunnel vision.
Ok, so for the sake of whatever, we'll ignore the other digital fares for a moment, and talk about music sales out of the iTMS. Check the calendar...what, a dozen days from now and Santa will do his fear-factored chimney drop, right? All those USD$79.00 2G iPod Shuffles that are being stuffed into stockings as we speak, along with untold tens of thousands of other iPods & iMacs, are going to come online all at once. The bounce for the iTMS will not be trivial, in any case, easily echoing well into 2007 - perhaps just in time for the iTV, iPhone & wIdescreen iPod to hit the shelves and then...bamn...another bounce.
Collapsing - give me a break. The only thing collapsing is the patience of Apple's shell-shocked competitors, as they try to endure being dragged around the town square behind a team of slathering wild horses...again.
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.
It is official; Netcraft now confirms: iTunes is dying
One more crippling bombshell hit the already beleaguered iTunes community when IDC confirmed that iTunes market share has dropped yet again, now down to less than a fraction of 1 percent of all listeners. Coming close on the heels of a recent The Register survey which plainly states that iTunes has lost more market share, this news serves to reinforce what we've known all along. iTunes is collapsing in complete disarray, as fittingly exemplified by failing dead last in the recent The Register comprehensive networking test.
You don't need to be a Steve Jobs to predict iTunes future. The hand writing is on the wall: iTunes faces a bleak future. In fact there won't be any future at all for iTunes because iTunes is dying. Things are looking very bad for iTunes. As many of us are already aware, iTunes continues to lose market share. Red ink flows like a river of blood.
The iTunes Store is the most endangered of them all, having lost 93% of its core customers. The sudden and unpleasant departures of long time iTunes Store customers Bob and Jill only serve to underscore the point more clearly. There can no longer be any doubt: iTunes Store is dying.
...
All major surveys show that iTunes has steadily declined in market share. iTunes is very sick and its long term survival prospects are very dim. If iTunes is to survive at all it will be among OS dilettante dabblers. iTunes continues to decay. Nothing short of a cockeyed miracle could save iTunes from its fate at this point in time. For all practical purposes, iTunes is dead. Fact: iTunes is dying
Shamelessly plagarized by me.
"Beware of he who would deny you access to information, for in his heart he dreams himself your master."
I think there's more to the declining sale than just a release of iTunes 7.0. I'm no expert on how things are going but it seems Apple is expanding a bit too much as to what they offer in the online store. First, we had just plain ol' music. And that's fine given the iPod can only play music. Then it expanded to photos and then videos. Soon the store offered some music videos... then TV episodes... and now movies...
Maybe it's because of other things... but my feeling and opinion is that Apple should have stuck with music overall instead of expanding into selling music videos, TV shows, and movies.
~ Old Warriors Society
People are lazy. People are stupid. People do stupid and lazy things.
That about covers it.
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.
Some of us wanted to be astronauts, some of us wanted to be firemen or doctors or schoolteachers. Orlowski, now... there's a guy who wants to be John C. Dvorak when he grows up.
We all need our goals.
I guess.
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 would like to see a mac mini with TiVo-killer hardware and software, but I doubt it will exist as long as Apple is selling TV shows in their store.
The movies and TV shows are in crappy quality aimed at the iPod screen size too, so they're a gross ripoff given that they're priced like DVDs.
I can't comment on the accuracy of your description since iTunes isn't available where I am living at the moment so I haven't been able to take a look at these services and I am to lazy to go to the trouble of making use of the loopholes. However, if that's really true and iTunes movies and TV shows are aimed at the iPod then Apple is barking up the wrong tree. Selling Movies and TV shows through iTunes is a good idea but they should tie it into Front Row and aim the sales at the desktop/mediacenter user not the iPod user. The iPod is a music player... period. I don't understand why Apple hasn't done more with Front Row and Mac-Mini combo. Perhaps they are so busy trying to wring the most out of the iPod they have forgotten about their other media products. I use a Mac-Mini as a media center along with an Elgato tuner and it works brilliantly but only because Elgato tacked a home made extension onto Front Row for their TV tuner which is a good thing since the remote Elgato ships with their tuners is (in my experience at least) complete crap. How hard can it be for Apple to create an API for TV tuner manufacturers like Elgato to use to integrate their products into Front Row? Still, it's cool to be able to control a DVD player, music jukebox, photo slideshow viewer, movie player and a TV tuner complete with recorder using a 6 button Front Row remote.
Only to idiots, are orders laws.
-- Henning von Tresckow
Instead of blowing us off as some elitist snob iTunes lovers, why not consider that money isn't always a huge factor for some people? The convenience alone is worth the price of entry.
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.
iPod screen: 320 by 240 pixel resolution.
iTunes movies: 640-by-480-pixel video.
While not quite as good as most DVDs, It's certainly not crappy, and certainly not aimed at iPod screens.
iTunes is treating the world outside the US like an unwanted stepchild. Many of the records that are available in the US shop and which are available on CD here in Europe cannot be bought from the iTunes Store. So, what do they expect me to do? I bought a lot of music from iTunes when the store came to Sweden in the first place, but when even such main stream things as a Disney soundtrack isn't available outside the US, it is no wonder people are heading back to the torrent sites (or record stores for that matter).
Once you get to your five computer limit, you can forcibly de-authorize all of them by clicking a button in your iTMS account management.
The TV shows I've purchased look great on my television. The idea that they're somehow designed for small screens is incorrect. A 22 minute TV show is about 250MB.
The writer is Andrew Orlowski, folks.
.Net was inaccurate starting from the title. Those quotations which are accurate are taken out of context, leading to total misunderstanding," is can be found here.
For those of you who've known The Reg for a while, that statement should be enough. For those of you who are newer to it, he leans more toward sensationalism and opinion masquerading as journalism than toward things like taking statements in context and checking his facts.
He's the one who started the non-conflict between Richard Stallman and Miguel de Icaza over Mono. The original article is here. Stallman's response, which begins with "Your article about me, GNOME and
Orlowski also had (and possibly still has, I stop reading whenever I see his name in the byline) a grudge against Google. He did a whole series of pieces about 'googlewashing', in which he accused Google of censorship, and another series in which he argued that Google News isn't Real Journalism.
On the few occasions where I've exchanged email with him personally, I found him rude, hasty, liberal with insults, and generally a putz. Back in Usenet days, he would have been called a classic flamer.
To the extent that there are real facts in this article, I don't know what they are, and I don't trust Orlowski to have presented them in any way but the one that makes him look like a daring investigative reporter breaking the scandal of the century.
Even assuming the premise of the article is true, and that Itunes Store sales have fallen dramatically, Apple will be the last one to care. The iTunes Store doesn't do much more than break even.
And for the sake of completeness, I should state my own bias by mentioning that I've spent a couple hundred bucks at the iTunes store over the last year. I'll probably do the same next year, for whatever that happens to be worth.