Are Apple's iTunes music sales plummeting?

Posted:
in iPod + iTunes + AppleTV edited January 2014
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."
«13456

Comments

  • Reply 1 of 120
    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.
  • Reply 2 of 120
    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!
  • Reply 3 of 120
    asciiascii Posts: 5,941member
    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?
  • Reply 4 of 120
    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!
  • Reply 5 of 120
    idleidle Posts: 49member
    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.
  • Reply 6 of 120
    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.
  • Reply 7 of 120
    eckingecking Posts: 1,588member
    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.
  • Reply 8 of 120
    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.
  • Reply 9 of 120
    shaun, ukshaun, uk Posts: 1,050member
    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.
  • Reply 10 of 120
    freenyfreeny Posts: 128member
    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?
  • Reply 11 of 120
    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.
  • Reply 12 of 120
    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....
  • Reply 13 of 120
    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.
  • Reply 14 of 120
    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.
  • Reply 15 of 120
    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!!
  • Reply 16 of 120
    melgrossmelgross Posts: 31,491member
    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.
  • Reply 17 of 120
    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.
  • Reply 18 of 120
    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.
  • Reply 19 of 120
    melgrossmelgross Posts: 31,491member
    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.
  • Reply 20 of 120
    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"....
Sign In or Register to comment.