iTunes Store Seeing Revenue Crunch?

[apb3]

Forget about what is right or fair. The reality is people cheat and steal.

Illegal file sharing is growing, because it is easy to do and there is a coolness factor to it(and a thrill factor). Teenagers and students usually don't have a lot of money, so they look for free stuff and you can be sure most of them rarely pay for music out of their own pocket.

But your main point was/is that society will/should somehow rise up and reject DRM.

Yes. people are cheap. People steal. How does that translate into some vast injustice socity needs to combat? It only reaffirms the need for fair and strong DRM schemes.

It only makes my main point - that people have the right to protect their IP - more important.

I guess I'm not getting your argument.

 

[MacVault]

Well said, the fact is DRM ISN'T an issue if u know what you are doing

HA! That's like saying the Patriot Act isn't an issue if you're not doing anything wrong.

 

[BWhaler]

However - have you really spent $1000's worth of Music off itunes?

I just checked out of curiosity:

7,506 Songs purchased from Apple
417 TV Shows/Movies/etc purchased from Apple
-----
8003 total items purchased from Apple.

So if you figure a bunch of the purchases were albums, it's still thousands of dollars.


For me, this calculation--thanks smart folders--just "sealed the deal" on my previous post about the quality of Apple's music.

I now have 7,500 songs which can only be reasonably played through "included ear buds." Anything better, whether in the home, in the car, through good computer speakers, or decent headphones, and Apple's music just doesn't cut it.

(And again, the important thing to note here is I am not an audiophile. Not a sound snob. Those people are never happy. But the fact that I am an average joe and I can tell it's poor quality is a big, big problem for Apple.)

I really hope Apple addresses this in a meaningful way. Charge me 5-10% of what I paid to upgrade the quality, I'll be back to being a regular customer. Otherwise, I think I am an Amazon.com music buyer from now on.

 

[Rocketman]

Once you get into the detail, this represents a decline from "fad growth" which was unsustainable last year. The reduction in transaction size is evidence the iTunes service is maturing. Leading edge buyers and fad buyers who "filled up" their iPods have now done that. The market will now transition to a "maintenance" mode where new iPod sales and existing iTunes sales will more closely track with newer buyers being less motivated and buying smaller amounts. What seems to be disregarded is the extremely wide availability and sell-through of iTunes gift cards this entire calendar year.

Rocketman

 

[Westside guy]

Well (and I'm pretty much repeating my Slashdot post from yesterday), when an album basically costs as much on ITMS as the CD does on Amazon, I really can't see the point in paying for a digital-only lower-quality version. I don't pirate music, I buy what I want; and the vast majority of my music purchases over the past three years have been in CD form. I do grab all the free ITMS songs though.

But given that ITMS (reportedly) doesn't turn a significant profit, and given that iPod sales are doing quite well - does Apple care that much? I'd think they would mainly care about overall market share.

Apple's DRM is pretty benign IMO, and doesn't enter into this equation at all for me.

 

[dontmatter]

Why? I highly doubt they're losing market share. Perhaps the novelty has worn off and people are going back to physical formats? I could see, in fact expect to see, a slowing of growth of the store. I would be surprised to see a cessation of growth. But shrinking? Really? It does make some sense, they have been trying to enter continually smaller markets to have room to grow into, with tv shows and movies, etc. Kinda like microsoft moving into cell phone OSes b/c they can't grow windows much by market share or by computers sold anymore.

I guess I'd buy that sales aren't so hot, but not actually shrinking.

 

[anodyne]

Could more people just be using pre-paid gift cards?

I know in my area that if you buy a gift card at Giant Eagle you get double the fuel perks, so a $50 gift card gets you .20 off a gallon of gas at the giant eagle gas station. you would be crazy not to buy prepaid itunes card if there was stuff u wanted on itunes. I know my entire family will be getting itunes gift cards from giant eagle this year from christmas, its a win win for everybody. I would like to know the amount of prepaid and gift card are being redeemed by itunes.

 

[Kirkmedia]

Here's the argument

But your main point was/is that society will/should somehow rise up and reject DRM.

Yes. people are cheap. People steal. How does that translate into some vast injustice socity needs to combat? It only reaffirms the need for fair and strong DRM schemes.

It only makes my main point - that people have the right to protect their IP - more important.

I guess I'm not getting your argument.

You're right,I didn't argue my point effectively. The fact is people will revolt
against DRM on music downloads, because there are too many different music services with different DRMS that only play on certain players. People understand that DRMs ultimately will restrict them to one service or one device. People know more about the restrictions of DRM than they did a few years ago. People don't want to be tied down. When we used to buy record
albums, they played on all record players. When we buy CDs they play on
almost all CD players. DVD's will play on almost all DVD players.

Untill all downloaded music(not videos) use the same DRM and work on all MP3
players, people will resist buying them.

 

[iEric]

who cares if they're losing revenue. at least they're getting some. and more than other companies. so it's still all good.

i found that buying online is too convenient and i tend to buy more and then i look at my bill and I'm like holy shiza. that's why I've been not buying so much lately. maybe others are doing the same.

 

[dontmatter]

I bet all music consumption is down. IMO, there hasn't been anything worth buying in a long time. Frankley i beleive the quality of the current music is not worth my money now

Haven't people been bemoaning the declining quality of music, the complete lack of anything good since the good old days, since the beginning of music? I say if you haven't found anything worth buying recently, then you haven't really been looking recently. In this day and age more music is being made than ever before, and it's more accessible than ever before -- there's something out there for everybody, except for those who simply will not listen to it because they weren't listening to it 10 years ago.

I am not claiming you have to spend all the time required to find music you think is good, I'm just saying, it is out there, and tons of it. And this is not a personal attack, but just an observation, because every music related thread has a few of these comments. Maybe top 40 radio stations used to play good music and now they don't, but the top 40 is one salty drop in an ocean of music.

 

[SnarkMan]

What Forrester really said

There is a lot of confusion in both the original article and this forum about what the Forrester researcher did and did not say. I am a Forrester subscriber and I've read the report so let me try to clear it up.

Forrester maintains a panel of 7,000 consumers who willing provide information about their technology habits, including their credit card purchases. No one snooped through people's credit card data. These people willing gave their information for study, knowing it would be kept confidential.

Forrester looked at transactions by this panel from April 2004 to June 2006. During this time there were 2,791 iTunes purchases by the 7,000 consumers on their panel.

Forrester also looked at the data from the perspective of "households," not just individual users. There were 5,580 households that remained part of their panel continuously from July 2005 to June 2006. During that 12 month period, only 181 of those households made an iTunes purchase.

Right away you should realize this isn't a very deep population sample. Apple has sold more than 1.5 billion songs on iTunes and this study only looks at a total of 2,791 of those transactions, spread out over two years.

Everything that Forrester says in this research about iTunes is drawn from this sample. The big headline is that the number of transactions, per household in their panel, went from about 17 in January 2006 to about 7 in June 2006, while the average amount of dollars spent on each transaction went from about $7 to about $5.50. This amounts to a 65% drop in monthly revenue during that period.

This was the first drop in the data that Forrester saw, reversing a generally upward climb since June 2004.

Forrester themselves cautioned heavily against people drawing larger conclusions. In particular, the report does not suggest that "iTunes monthly revenue droped 65%." It says the monthly revenue dropped 65% among the people it's been watching as part of its consumer panel.

It may well be that people get an iPod, buy some songs (not too many) and then stop buying after a little while. But if more people keep buying iPods and then buying songs that may prop up the revenue from the store. Of course, long term, that still bad news for the iTunes store but it's different that what's been reported.

 

[rockthecasbah]

I don't know how many people are like me, but i buy all of my music from the iTMS with prepaid cards. I don't like the idea of having a credit card type purchase (besides the fact that i don't have one) because the ease of spending...With a balance limit right there I can better manage my funds (and yes i know i could use a limit with the credit card but the fact is that i still like prepaids )

I think this report is a little shady...

 

[BoyBach]

If this is true, and Apple wants a quick increase in sales, they could always sell some TV shows and movies in their other iTunes Stores (not just the US.)

 

[Unspeaked]

So did anyone else notice the CNet article this afternoon about vinyl single sales surging since 2001...?

Hmmmm.

 

[princealfie]

Haven't people been bemoaning the declining quality of music, the complete lack of anything good since the good old days, since the beginning of music? I say if you haven't found anything worth buying recently, then you haven't really been looking recently. In this day and age more music is being made than ever before, and it's more accessible than ever before -- there's something out there for everybody, except for those who simply will not listen to it because they weren't listening to it 10 years ago.

I am not claiming you have to spend all the time required to find music you think is good, I'm just saying, it is out there, and tons of it. And this is not a personal attack, but just an observation, because every music related thread has a few of these comments. Maybe top 40 radio stations used to play good music and now they don't, but the top 40 is one salty drop in an ocean of music.

But if the only good pop album in 2006 was Christina Aguilera's album, then what does that mean for the record industry?

 

[princealfie]

HA! That's like saying the Patriot Act isn't an issue if you're not doing anything wrong.

Still, DRM is undermining iTunes and we all know this for a fact.

 

[apb3]

You're right,I didn't argue my point effectively. The fact is people will revolt
against DRM on music downloads, because there are too many different music services with different DRMS that only play on certain players. People understand that DRMs ultimately will restrict them to one service or one device. People know more about the restrictions of DRM than they did a few years ago. People don't want to be tied down. When we used to buy record
albums, they played on all record players. When we buy CDs they play on
almost all CD players. DVD's will play on almost all DVD players.

Untill all downloaded music(not videos) use the same DRM and work on all MP3
players, people will resist buying them.

OK. Talking past each other, I guess.

I see your point about competing DRM schemes, but still maintain that DRMs (especially Apple's benign flavor) are necessary. Would it change your argument if, say, Apple's DRM became the industry standard?

Also, like I said, at least with Apple DRM it is fairly simple to protect your personal use concerns. Can't speak for the others but my expeerience w/ Apple DRM makes me fall short of call to revolution.

 

[apb3]

Still, DRM is undermining iTunes and we all know this for a fact.

Huh? is that sarcastic? or are you serious?

 

[MacVault]

Huh? is that sarcastic? or are you serious?

Yea, it's true. I buy a song from iTunes only once in a blue moon - when I need the song RIGHT NOW. But for the majority of my music I buy it on CD and rip it to iTunes so I don't have to deal with DRM. If there was no DRM on iTunes I would buy all my music from iTunes. So yes, the DRM is undermining iTunes.

 

[balamw]

Still, DRM is undermining iTunes and we all know this for a fact.

Yes, but facts are all opinions.

All I can say is LOL.

B

 

[kainjow]

Yea, it's true. I buy a song from iTunes only once in a blue moon - when I need the song RIGHT NOW. But for the majority of my music I buy it on CD and rip it to iTunes so I don't have to deal with DRM. If there was no DRM on iTunes I would buy all my music from iTunes. So yes, the DRM is undermining iTunes.

You can also burn your iTS music, and then rip it back into iTunes. DRM gone, 100% legal.

Also check out DRM Dumpster

 

[princealfie]

Yea, it's true. I buy a song from iTunes only once in a blue moon - when I need the song RIGHT NOW. But for the majority of my music I buy it on CD and rip it to iTunes so I don't have to deal with DRM. If there was no DRM on iTunes I would buy all my music from iTunes. So yes, the DRM is undermining iTunes.

In fact, emusic is kicking the butt off itunes.

 

[apb3]

Yea, it's true. I buy a song from iTunes only once in a blue moon - when I need the song RIGHT NOW. But for the majority of my music I buy it on CD and rip it to iTunes so I don't have to deal with DRM. If there was no DRM on iTunes I would buy all my music from iTunes. So yes, the DRM is undermining iTunes.

So buying a whole CD (instead of just the tracks you want - or do you enjoy all that fluff crap they add to each CD? ) and ripping it into iTunes is easier and more cost effective than buying only the songs you want from iTunes, burning it to cd and re-ripping to get rid of the DRM if you REALLY NEED to play it on your Zune or whatever???

That just seems silly to me for the FEW times that would be an issue.

 

[slffl]

" It may reflect a seasonal bounce that hasn't yet manifested itself. However, it might not"

Wow, that's some great analysis. I can do it to.

This might suck, then again it might rock.

 

[Unspeaked]

You can also burn your iTS music, and then rip it back into iTunes. DRM gone, 100% legal.[/url]

Yes, because it makes a lot of sense for me to A) spend $9.99 on an album via iTunes - which is lower quality than a commercial CD - spend more money on a blank disc plus waste my time burning it and ripping it back than to B) buy the disc I want at BestBuy on sale for $8.99 and already have what I was looking for to begin with, with the option of converting it to any format I'd like at any quality I'd like in the future (not to mention some nice artwork, liner notes, etc).

I don't know, option B) sounds a little nicer to me...