iTunes Store Seeing Revenue Crunch?

[iMeowbot]

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.

Okay, so Orlowski essentially did make up his conclusion all by himself. Figured as much

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.

The store's volume won't much either way to Apple, so long has the hardware keeps moving. The bigger trend of reduced music sales (in all forms) could be a worry for them, if there is actually less interest in new recorded music out there. The fancier models with more capacity (and a beefier markup) will be that much harder to push if collections aren't growing so fast.

 

[balamw]

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

The economics are a bit different whan you consider that you can buy a song on iTMS for $0.99 vs. the $8.99 at a B&M store (FWIW, I haven't even been seeing too many $9.99 loss leaders at Best Buy recently, most are $10.99-$11.99 these past few months...). True you may get 10 more songs, but you're at least $8 poorer.

For me the equation also include BMG's yourmusic.com. Can I wait a few months to get this CD. Yes, then get the CD for $5.99 at YM, (soon to be $6.99 in 2007). This complicates things. If I think I might by 3 or more tracks from an album at iTMS, but can wait. I'll get the whole thing at YM.

B

 

[donlphi]

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

agreed...

 

[EricNau]

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?

Apple could easily argue that the fault lies with our government - that our government agencies are not taking the necessary actions against pirates.

Which sounds better?...

"We need to take a better stand against criminals" or "we should take money from innocent people to compensate for the criminal's actions?"

 

[Unspeaked]

The economics are a bit different whan you consider that you can buy a song on iTMS for $0.99 vs. the $8.99 at a B&M store (FWIW, I haven't even been seeing too many $9.99 loss leaders at Best Buy recently, most are $10.99-$11.99 these past few months...). True you may get 10 more songs, but you're at least $8 poorer.

I see your side of this, but as someone who primarily buys albums, iTunes has never made sense to me.

Even CD singles can be had for $2 or $3, living in a metro area with a wealth of music retailers. Heck, Tower Records has their CD singles priced at 75 cents during their current liquidation sale!

 

[fixyourthinking]

If this were true ... then Apple would have no reason to lock the iPod in to the iTunes store from this point on. IE ... it would be better to sell more iPods than deal with the hassle of negotiating with the record companies, encoding the songs into AAC, and making iTunes Songs only playable on an iPod.

Therefore ... this can't be true.

 

[brad.c]

When iTunes was first released, everything was new. After the first few months, people had gotten the available songs they wanted. Now, those customers simply wait for new songs they want to be released.

The inital surge and the subsequent drop should have been expected.

I agree, as it applies to the 25+ demographic (like me). I'm only an occasional purchaser off iTunes, but I'm still enjoying the payoff from ripping my CD collection and putting them into storage. But wouldn't it be significant regarding the under 25's who buy the most music on a regular basis?

 

[macfan881]

also i wonder to if its the new Tax deal there trying to put on itunes Ijust moved out of nj during the sumer and in sempter i rember reading that the pased a new tax bill and now ur having charged tax on itunes songs as well

 

[Kirkmedia]

Industry standard DRM

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.

Yes, an industry standard, will increase paid music downloads.

 

[mahonmeister]

I've only bought one song from the iTunes Store. If they sold lossless quality and allowed you to download and print all the art that comes with regular CDs then I'd buy all my music from iTunes. Otherwise I don't plan on buying any more music through them.

So this downward trend doesn't surprise me.

 

[twoodcc]

wow. i really believe that the store is probably doing just fine, like Apple said (or at least i sure hope so)

 

[aserg]

Bah...

Maybe everyone started buying from AllOfMp3.com, I know I have! And I believe they wouldn't show sales from them.
AllOfMp3>iTunes

 

[gwangung]

Right away you should realize this isn't a very deep population sample.

Right now, folks should realize you don't know that much about statistics.

*sigh*

 

[Unspeaked]

Maybe everyone started buying from AllOfMp3.com, I know I have! And I believe they wouldn't show sales from them.
AllOfMp3>iTunes

allofmp3.com is fine if you don't mind a little polonium mixed in with your downloads...

 

[balamw]

allofmp3.com is fine if you don't mind a little polonium mixed in with your downloads...

Doesn't matter now. AllofMP3 is dead, dead, deadski.

http://news.com.com/Russia+agrees+to+shut+down+Allofmp3.com/2100-1027_3-6139350.html

B

 

[Westside guy]

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

In fact, emusic is kicking the butt off itunes.

You keep using that word - I do not think that word means what you think it means...

 

[PCMA]

Where is the iTunes 2 Billion Songs Downloaded Contest?

iTunes passed the 1 billion downloaded songs mark in February.

We were also led to believe that Apple were selling songs at a rate of >1billion per year - and that sales were accelerating.

So where is the celebration (or media release) to mark the download of the 2 billionth song from iTunes.

 

[aserg]

Doesn't matter now. AllofMP3 is dead, dead, deadski.

http://news.com.com/Russia+agrees+to+shut+down+Allofmp3.com/2100-1027_3-6139350.html

B

I heard it the act will be effective in June 2007, so there's a long way to go.
AoF probably has something up their sleeves. If they do get closed down, they could always open up under a different name, nothing USA can do about it.

 

[puuukeey]

win win situation

If the mp3 sales go up Apple does well
if the mp3 sales go down. SCREW RECORD COMPANIES.

 

[AvSRoCkCO1067]

If the mp3 sales go up Apple does well
if the mp3 sales go down. SCREW RECORD COMPANIES.

well said

 

[theBB]

Check out emusic.com they sell digital tracks of better quality than iTunes for $0.25 each.

Not anymore, they have increased their price by 30%, now it is 33c per song.

This seems to be typical disinformation, damn lies and statistics. What seems to be down 65% is the rate of increase of sales not the sales themselves.

I read the article, but I don't see that. I am probably missing it, could point to that piece of info?

Since January 2006...

Didn't Apple have 3 conference calls since then?
None of them showed any drop in iTunes music sales.If there really IS a 65% drop since "Jan.2006" this drop must have taken place after August 2006 because sales were on a steady increase.

Sorry I don't believe this..

Agreed. Neither do I.

 

[wordmunger]

I think the key problem with this research is that it's self-reported. Two years ago, I probably remembered every iTunes purchase I made, because of the novelty of it. Now I have to kick myself to remember the purchases when the credit card bill comes in. I seriously doubt revenues are down 65 percent at Apple -- after all, they're getting new potential iTunes every day, with every iPod sale.

 

[balamw]

I read the article, but I don't see that. I am probably missing it, could point to that piece of info?

I was paraphrasing from lost posts in the earlier thread.

EDIT: A good link below https://forums.macrumors.com/posts/3144614/

B

 

[BWhaler]

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.

I agree with the first and last points.

The price of albums and DVD's are so close to Amazon at this point--and Apple's album prices has been creeping up--that it makes zero sense to buy from the Apple store.

Buying one-off songs or TV shows now and then seems to be the buying behavior people are gravitating towards. Entire movies or albums doesn't seem to have an economic argument anymore.

I also agree with the Apple DRM comment. I don't mind it since it doesn't get in my way and I know I can break it if need be. (Something I won't do until the moment I am prohibited from doing something with my music I believe I legally should be able to do.)

Finally, I think Apple does care about the music being sold through the store. It makes for a huge switching cost and barrier to exit from the iPod product line.

 

[jmbear]

When iTunes was first released, everything was new. After the first few months, people had gotten the available songs they wanted. Now, those customers simply wait for new songs they want to be released.

The inital surge and the subsequent drop should have been expected.

I was thinking that too; however, its not like people have a wish-list of all the songs they want and buy them once they get a chance, and then only buy new releases. You continue discovering new music, even if it isn't a new release.

There could be many explanations for this, a simple substitution effect from digital music to CDs because you can gift-wrap a CD (holiday season), the same can't be done with digital downloads.

In the end, we should not even care about this lol, since Apple makes money on iPods not on iTMS. Give us more iPhone rumors!