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Are Apple's iTunes music sales plummeting?

post #1 of 121
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Apple Computer's industry leading iTunes digital download service has experienced a collapse in sales revenues this year according a recent analysis from Forrester Research.

While Apple has remained tight-lipped on the revenues and profits it generates through the service -- stating only that it operates at above 'break even' cost --Forrester believes credit card transaction data may offer some clues.

The firm recently conducted an analysis of all related transactions over a 27-month period. And according to a write up over at The Register, this year's numbers are far from encouraging.

"While the iTunes service saw healthy growth for much of the period, since January the monthly revenue has fallen by 65 percent, with the average transaction size falling 17 percent," the report states. A rebound in sales that took place during the spring of 2005 wasn't repeated this year.

Meanwhile, data from Nielsen Soundscan indicates the problem is not Apple's alone, showing three consecutive quarters of flat or declining revenues for the digital download sector as a whole.

The Register notes that this ominous trend has manifested despite healthy growth for digital music players. During the same period monitored by Forrester, iPod sales quadrupled and Apple's grew digital download inventory on iTunes significantly as video and movie catalogs joined the plethora of digital music tracks.

According to Forrester's data on the purchasing trends of iTunes shoppers, some 3.2 percent of online households -- around 60 percent of the wider population -- bought at least one download during its sample period.

"These dabblers made on average 5.6 transactions, with the median household making just three a year," the report states. "The median transaction was slightly under $3."
post #2 of 121
Eck. I have purchased about 60 downloads from iTunes so far this year, closer to 100 I believe.

I have recently bought an annual subscription with their closest competitor eMusic.com, which I like, as they have VBR with slightly higher bit rate per song than iTunes 128 kbps norm.That and no DRM. In the two months that I have been with eMusic, I've downloaded almost as much as I've downloaded on iTunes this year.

Actually, I am one of those who actually still buys more CD's than downloads digital albums/songs. My iTunes collection is at 53 GB and I haven't uploaded the vast majority of my 1,000 music CD's.
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post #3 of 121
DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM!

I'm a long-time Apple fan and I actually want iTunes to succeed. However, I hate having my media, whether music, videos, etc. being locked up by DRM. I HATE DRM! And it's not because I want to share my files with everyone. I just don't think I should have to gain permission from some self-serving corporation before I can listen/watch the media I have purchased legally! AND I don't want to be told what device I can or can't play the music on. Since iTunes came online I've purchased maybe only a mere 20 songs, and I purchase them only when I'm in a bind and need the song RIGHT NOW. Otherwise I go buy the CD and rip it - in the format and bitrate of my choosing and WITHOUT DRM! Soooo... I say let's send Apple and the industry a message: FREE OUR MUSIC/MEDIA!

DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM!
post #4 of 121
The problem is that in every category except convenience, CDs are superior. How successful would a campaign to replace DVDs with VHS be? Not very? Well how successful do they expect this to be then?
post #5 of 121
If Apple is only making pennies on this anyway, who cares? It's not like people aren't buying music anymore. It is still being purchased, ripped and played on an mp3 player. For as long as the iPod is the player of choice, Apple should be sufficiently pleased.

-Clive

And for the record, DOWN WITH DRM!
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post #6 of 121
This is only from credit card data? I'm guessing that doesn't include iTunes gift cards? From my own observations, those have gone up a lot in popularity - kids are a big chunk of the people buying songs and movies, and parents don't want credit cards in their hands.
post #7 of 121
I'm not a music buff by any stretch of the imagination. But I've bought a great number of songs on iTunes. I KNOW this past year alone I've used 3 $25 gift cards and that doesn't count the number of albums I've bought with my credit card. Just recently my wife, kids and I were putting up the Christmas tree and wanted some christmas tunes to make it more festive. I went on iTunes, bought 3 Christmas albums and bam! instant holiday music.

Maybe Apple should promote iTunes a little more in their adds? Or maybe have a little tutorial for people when they install iTunes when they buy an iPod.
post #8 of 121
I don't know what they expect, itunes is no longer a novelty anymore, people are used to it, so the sales are going to drop off. I don't think anyone thought that itunes would replace cds within a few short years, the only area of concern is if ALL forms of music purchase plummeted, because then the quadruple in ipods would only interest labels like Universal even more for a piece of the ipod's ass.
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post #9 of 121
Quote:
Originally Posted by Centris650

[snip]... Maybe Apple should promote iTunes a little more in their adds? Or maybe have a little tutorial for people when they install iTunes when they buy an iPod.

No. Apple needs to get rid of DRM! That's right! Free our music! I'm not for illegal file sharing. I just want to be the one in control of the music I PAY FOR. At the VERY LEAST, Apple should open their DRM to the world so that the music/videos are not locked only to devices blessed by Apple.
post #10 of 121
I agree with the previous sentiments. Until iTunes stars selling true CD quality lossless files without all the DRM restrictions I will continue to buy CD's instead. For genuine audiophiles there is very little incentive to switch.
post #11 of 121
I dont understand the music industry. They are so protective over digital downloads and the DRM that keeps them from being traded when CD's are both the highest quality and sooo easy to rip/encode/trade. Why all the attention to digital downloads and not CD's?
post #12 of 121
I occasionally buy individual tracks from iTunes (and I have been buying BSG episodes), but on the whole I do not buy whole albums there. $10 (or more!) is too expensive when I can get the CD for $10 or $12 from Amazon. With a CD I get better sound quality, a backup and a printed insert.

$5 or $7 an album on iTunes would make it more tempting. But I know that's not completely up to Apple.
post #13 of 121
i know a lot of people who wouldn't consider buying something at 128Kbps


a lot would fold in at around 256Kbps for singles which is only marginally larger in file size.


128 is pathetic and low enough that even non-audiophiles can tell it doesn't sound as good....
post #14 of 121
My only concern with this report, is the impact it will have on iTV. If people are buying less music after selling 70 million iPods, what does that indicate for the future of movie sales.

This may explain why Apple has been delaying the sale of the true video iPod. Only a few may buy it at this time given the limited choices of movies and popularity of 50" plasma screens.
post #15 of 121
Quote:
Originally Posted by intlplby

i know a lot of people who wouldn't consider buying something at 128Kbps


a lot would fold in at around 256Kbps for singles which is only marginally larger in file size.


128 is pathetic and low enough that even non-audiophiles can tell it doesn't sound as good....


I'm sorry, but that statement is completely untrue. The only non-audiophiles who can hear a difference are the ones who are playing the songs through their hi-fi stereo setup. And if they have that setup, they cease to be non-audiophiles.

I'm tired of people complaining about the 128kbps AAC format from Apple. The large majority of people don't care what it's encoded at. Only geeks or true audiophiles care, and they are a small minority. I know alot of you would contest me on that statement but I believe it. I wish someone would perform an experiment so that we could figure out how many average people truly can hear a difference.
post #16 of 121
I think we're seeing a maturing and increasing sophistication of the digital music customer. Several years ago, this was all a novelty. Now that we've all had some time to actually use the iTunes Music Store, we're realizing that:

1. DRM truly does *s u c k*.

2. 128 Kbps just doesn't cut it. It doesn't take an "audophile" to hear the difference from CD quality.

I agree with Shaun: "Until iTunes starts selling true CD quality lossless files without all the DRM restrictions, I will continue to buy CD's instead."

But... I still love my iPods!!
post #17 of 121
Quote:
Originally Posted by DeaPeaJay

I'm sorry, but that statement is completely untrue. The only non-audiophiles who can hear a difference are the ones who are playing the songs through their hi-fi stereo setup. And if they have that setup, they cease to be non-audiophiles.

I'm tired of people complaining about the 128kbps AAC format from Apple. The large majority of people don't care what it's encoded at. Only geeks or true audiophiles care, and they are a small minority. I know alot of you would contest me on that statement but I believe it. I wish someone would perform an experiment so that we could figure out how many average people truly can hear a difference.

No. You're right. I keep saying the same thing.

It's only a very small number of people who care. Almost all of them are on the online boards.

I'm an audiophile, and I can hear the difference on a good system.

But, really, unless someone has a "good" set of headphones, listening from an iPod, or typical computer speakers, won't reveal any problems from a professionally encoded song.

The case is often different from stuff downloaded fron the P2P networks because much of what I've heard from there is simply trash.
post #18 of 121
Since iTunes began I have purchased maybe 300 songs. I might have another 200 plus songs that I have dowloaded for free but those are mostly the rare bootleg type..I despise those who feel entitled to download free music when those songs are for sales somehwre legally.

I have an 80GB ipod which is now FULL with about 19,500 songs, mostly loaded in from my CD collection. I have about 8000 plus CDs purchased over the past 22 years. I too love the idea of iTunes but I ususally want the best fidelity possible without limitations, so I woud rather buy the actual CD, packaging and all. If I dislike it, I can trade it in at a used shop for something else and my net cost for that music (already loaded in my iTunes) is still cheaper than an iTunes download, and NO LIMITATIONS on how and where to play it.
post #19 of 121
As has been stated by others

File sharing services provide a superior product in quality and use, with higher bitrates and no DRM encumbrances. Its basic business, if you want to compete, you need to offer a better solution than the other guy. Provide a lossless file (relative to what comes on a CD), than can be manipulated by the user as they see fit for the same cost per song.

Oh, and make it easier to re-download lost files that were purchased.
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post #20 of 121
Quote:
Originally Posted by Bacillus

As has been stated by others

File sharing services provide a superior product in quality and use, with higher bitrates and no DRM encumbrances. Its basic business, if you want to compete, you need to offer a better solution than the other guy. Provide a lossless file (relative to what comes on a CD), than can be manipulated by the user as they see fit for the same cost per song.

Oh, and make it easier to re-download lost files that were purchased.

File sharing services very often offer higher bitrate crap.
post #21 of 121
I've bought maybe a half dozen iTunes tracks since the service's exceptions. They're strays that I can't find on a CD I'd like. Don't have an iPod -- or any other digital audio player, for that matter -- and wish I had one only on long car trips. I took one a couple years ago, as I recall. Otherwise, buying complete operas (as an example) through iTunes, without the hard copy documentation that is occasionally nearly as valuable as the music, makes no sense. Same with most classical music. Not the greatest vehicle for the genre. Now, as for my copy of "Baby Got Back"....
post #22 of 121
Quote:
Originally Posted by Bacillus

As has been stated by others –

File sharing services provide a superior product in quality and use, with higher bitrates and no DRM encumbrances. Its basic business, if you want to compete, you need to offer a better solution than the other guy. Provide a lossless file (relative to what comes on a CD), than can be manipulated by the user as they see fit – for the same cost per song.

Oh, and make it easier to re-download lost files that were purchased.

Are you talking for the general population? No? Ok.
post #23 of 121
that is some SERIOUSLY statistically dubious research. but, Forrester is famous for research long on dramatic conclusions but short on reliability.
post #24 of 121
Yeah. It's seems to be a shame that every company in the business is hopeless incorrect, as long as what they are saying goes against what someone wants to believe.
post #25 of 121
Quote:
Originally Posted by mazzy

Since iTunes began I have purchased maybe 300 songs. I might have another 200 plus songs that I have dowloaded for free but those are mostly the rare bootleg type..I despise those who feel entitled to download free music when those songs are for sales somehwre legally.

I have an 80GB ipod which is now FULL with about 19,500 songs, mostly loaded in from my CD collection. I have about 8000 plus CDs purchased over the past 22 years. I too love the idea of iTunes but I ususally want the best fidelity possible without limitations, so I woud rather buy the actual CD, packaging and all. If I dislike it, I can trade it in at a used shop for something else and my net cost for that music (already loaded in my iTunes) is still cheaper than an iTunes download, and NO LIMITATIONS on how and where to play it.

Well said.
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post #26 of 121
If Apple offered lossless files at $1.29 each, I would buy some singles, but I still prefer CDs.
post #27 of 121
Quote:
Originally Posted by Bacillus

As has been stated by others –

File sharing services provide a superior product in quality and use, with higher bitrates and no DRM encumbrances. Its basic business, if you want to compete, you need to offer a better solution than the other guy. Provide a lossless file (relative to what comes on a CD), than can be manipulated by the user as they see fit – for the same cost per song.

P2P is not a product and is generally not a legal business. Where the RIAA may be about highway robbery, P2P is basically just theiving in the other direction.

I don't think the point of iTunes is the albums, but allowing you to cherry-pick the song you want rather than having to buy the album.
post #28 of 121
I am more than happy with the 1863 tracks I have purchased from the iTunes store.

I don't feel restricted by the DRM at all.
I have made CD's of all my purchases, all of which therefore have no DRM on them.

I use the purchased music on the many iPods and computers that I own with no issues at all.

I stream the music to my HiFi and I'm more than happy with the 128 bit rate, in fact I compress all my music at that rate.

I do still but CD's but only when they are cheaper than the same purchase on iTunes (which does seems to be happening more and more).

There is to much 'noise' going on about 'unfair' DRM. It is very easy to make your own 'legal' non-DRM copy of the music you buy from the iTunes store on a CD. In fact you can make 7 legal copies of the album, and even more if you change the playlist round.

So what is the problem?

Ian
post #29 of 121
It concerns me that this research company can access credit card purchase data. How is that possible if they aren't related to Apple?
post #30 of 121
Quote:
Originally Posted by Macvault

DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM! DOWN WITH DRM!

I say let's send Apple and the industry a message: FREE OUR MUSIC/MEDIA!

It is not an Apple issue, mate! The music industry would NOT play ball with Apple until it approved a DRM scheme. In any case, since it can be instantly circumvented I don't see the point of ranting about it. No one has found it to be a serious roadblock, other than iPods being the only devices that have the least hassle when used with iTMS. The real issue with all of these download centers is QUALITY... and a lossless system would be nice, though, Apple has little to gain from making the quality better and all other sites have a lot to lose since it will cost them dearly via financial 'penalties' imposed by the recording companies. Apple still will sell gazillions of iPods so they would not be affected nearly as much. One might have to factor MS and Zune into this,but not yet since it is not clear how the music industry views Apple and MS, together or as combatants!!! Zune? Hopefully, never
post #31 of 121
It's been time for a while now for Apple to make some improvements for the iTS.

1. Upgrade iTS song quality from 128 to 192.
2. Offer incentives for buying albums (e.g. single song purchases create discounts for buying an album).
3. (this is the big one) Offer subscriptions as an option, at $15-20/mo., with reduced costs for purchasing songs you want to keep instead of rent.

I think it's likely 1 & 2 are in the works (there's been rumors about #2 at least), but Apple has resisted #3 because it threatens their FairPlay lock-in model. (The line about there not being "consumer demand" for such a model is, IMO, bogus. Jobs knows very well that offering such an option w/ iTunes would both *create* huge demand, and subscriptions done with a popular service like iPods + iTS have the potential to be both *incredibly* appealing and popular.)

Apple's a la carte model is a great idea, and by no means should be discontinued. But they need to expand their model. They've took a hesitant step down that road with Season Passes for tv shows in iTS, now they need to take the full step.... before MS gets its act together and starts sells nano-sized Zunes, with their free 1 month of unlimited music.
post #32 of 121
Yes it is NOT Apple but the music companies who are the bad guys here. I used to be in the record business, Retail first and then for a few labels and they got pissy when cassettes were first coming out and got huge. Their promo line was "HOME TAPING IS KILLING THE MUSIC INDUSTRY," so just imagine their initial response when CD burning began.. With cassettes they ended up getiing a royalty and that is why they still want more, like a piece of the iPod which I hope they never get. Universal is getting a piece of Zune sales so by now they probably made about three dollars . This would set a really bad example. They should get a cut of music sales and NOT HARDWARE sales.
post #33 of 121
I used to have no issues with Apple's DRM until I moved in with my girlfriend. We're both big music fiends and like to listen to stuff from eachother's collections. Unfortunately, she can't listen to my iTMS songs on her machine without deactivating her iTunes account and then logging into mine.

I mean, really. We're using the network sharing features built right into iTunes, not doing anything illicit at all. Shouldn't those songs be accessible to everyone on the network, just for the purposes of listening?
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post #34 of 121
I'm more partial to buying used CDs either from ebay or local stores. That way I can rip 'em at any rate I like and stash them somewhere as a backup or just sell 'em off to buy more.

I've bought a few songs through iTunes, but not many and usually because it was the only good song on the album.
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post #35 of 121
I really suspect that there is going to be a great push this year to demonstrate the need for Media Players to have and pay a sold called "Piracy Tax" upfront on each player sold.

Microsoft has led the way with a paltry $1 per Zune sold to be given to Universal. Now the studios are going to drum up any research they can to show the need to collect their royalties upfront.

It's going to be interesting. Will Apple cave and add $20.00 to every iPod in this naked money grab by the studios?

Does anyone doubt who commissioned this study by Neilson?
post #36 of 121
Everyone knows that Apple makes the money on the iPods, not with iTMS. The huge selection of media and music are what make the initial purchase attractive, along with the peer pressure of owning the latest and greatest of any consumer product. iPod still rules in that space.

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post #37 of 121
Quote:
Originally Posted by tetzel1517

Unfortunately, she can't listen to my iTMS songs on her machine without deactivating her iTunes account and then logging into mine.

I mean, really. We're using the network sharing features built right into iTunes, not doing anything illicit at all. Shouldn't those songs be accessible to everyone on the network, just for the purposes of listening?

There's something funky going on with your setup. You shouldn't have to deactivate one account to listen to another.

Each computer can be activated for multiple iTunes accounts. When you first try to play a DRMed song, you have to enter the iTunes user-name and password for the account under which that song was bought. As long as that account hasn't already been activated on 5 machines, iTunes will then be activated for that account and will be able to play any song bought under that account without having to enter any more passwords.
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post #38 of 121
To get back on topic: the news story is from the Brit rag The Register, which is famously anti Steve jobs and Apple. Their data is clobbered together from half facts and hyped with blaring (and often misleading) headlines. Their fake news (apologies to Jon Stewart) has caused Apple's stock to drop almost $3 today. Which I'm sure was their intention.
post #39 of 121
I don't think the research article is very accurate.
There will always be a small minority who buys a lot and the vast majority who buys a little.
How much of this decline has to do with the state of the music industry?
No good music - no sales.

I think it has more to do with two other issues.
There is more content available for free now for iPods
- Podcasts
- tons of free video online
- DVDs ripped to iPod format

Convenience
A digital download is convenient until your HD dies or you need to switch computers or you get a second iPod, etc. etc. etc. CDs are easy to rip and you can sell them after you rip them.

Digital will win in the long run but until we all have automatic backups(Time Machine) and Bonjour dejour(Mac OS X) the vast majority of users are stuck trying to get things working right in Windows hell.
post #40 of 121
Quote:
Originally Posted by willrob

To get back on topic: the news story is from the Brit rag The Register, which is famously anti Steve jobs and Apple. Their data is clobbered together from half facts and hyped with blaring (and often misleading) headlines. Their fake news (apologies to Jon Stewart) has caused Apple's stock to drop almost $3 today. Which I'm sure was their intention.

What are the odds that these story releases are the result of market manipulators? I'd like to see the top stockholders who coincidentally shorted shares in Apple today...

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