Are iTunes sales dropping?

The Macalope has a better question: who cares?

The Apple web is rife with cries of “woe is Apple” and angry denouncements today over Forrester Research’s report claiming that the only people still buying songs from the iTunes Store are a family of shut-ins in Kenosha, Wisconsin.

Forrester’s conclusion is that DRM isn’t working and people are still stealing music as their primary means of acquisition.

That’s not the Macalope’s experience, but for the sake of argument (and because it spares the Macalope from having to do a bunch of math), let’s say Forrester is right and iTunes sales are down 375 million percent or whatever they said.

Let’s look at some things that make this less concerning than you might think:

  1. Apple doesn’t make money on music sales. They’re used to drive iPod sales.
  2. iPod sales are still strong.
  3. iTunes is still by far the most popular online music store.
  4. Falling sales of DRM-ed music mean the recording industry has to consider non-DRM solutions.

The negatives are:

  1. The recording industry could come up with something more heinous than DRM.
  2. Apple will no longer have the “velvet lock” of iTunes DRM that keeps customers in iPods.

But then they’ll just have to keep people buying iPods by keeping them awesome.

So, can we all calm down, please? The Macalope can barely hear his iTunes-purchased Christmas music over all the shouting.

  • I’d be interested to know how fussed Apple would be if (and I realise we’re in fricking fairy-land here, but bear with me) the record labels asked them to drop all this DRM nonsense and just sell proper, 320 kbps MP3s just like Bleep does.

    I’ve always assumed the record companies were the guys driving the DRM. However, Apple doesn’t have a consistent record of giving customers full and easy control of their data. iTunes stores (at least some) track information in standard ID3 tags in the MP3 files themselves, making it easy to move your own ripped music to other systems and players. iPhoto, in contrast, doesn’t store any metadata you input in the file itself (download exiftool and have a look yourself), making it a pain to move your photos to another system.

    Would Apple really want to give up its control over iTunes Store content, when people might buy 1000 tracks, and then decide they’d really rather play them on a Zune? (I did say we were in fairy-land, but hey, different strokes for different folks.)

  • Here here. Finally some one who actually heard Steve Jobs state just that many times.

    All together now… “Apple is a hardware company”

  • Good post! I couldn’t agree more!

    In fact, I covered the subject in today.


  • Mitch:

    @The Macalope:
    My thoughts exactly. Of course it sounds bad, but iTunes has been more of a project to support the iPod platform and keep music companies happy, than anything else. Falling iTunes sales will probably not influence Apples profitabilaty in any measurable way. The danger I see, could be that Apple has a less strong position in negotiating. That said, ALL online sales seem to be behaving roughly the same so a decrease in absolute numbers probably doesn’t mean a big change in market share so iTunes will still be the biggest by far.

    Of course it’s the music companies who want the DRM. It’s all around: they (and the film industry) would like you to pay for every time you use a piece of copyrighted work, that would be their ultimate goal.

    Apart from that, just theoratically, (in fairy-land as you say), it’s the seamless integration that makes iTunes such a great combination with the iPod. Sure, some people would use tracks on other devices, but that happens already. And by comparison, a company like Microsoft is going a different direction because they make money off licensing the DRM technology to people. So they probably will never sell DRM-less material., is my guess.

    I think if Apple were to lose DRM it would only be to their benefit; having a good, easy to use store would attract more people then there would be people who would buy music and then use it on other devices. I mean, it would have a net result of more people wanting to own an iPod that’s integrated into the iTunes system. Partly because the iTunes system would then be the only large scale store to sell the stuff and people would want to associate themselves with it.

  • It appears that the truth is quite different to that portrayed by Forrester’s limited study.

    The iTunes Store is actually still growing at an impressive rate contrary to the report. Forrester has used only one metric for their stats – credit card purchases from a small sample of only 2000.

    If you actually do the sums and count all other available data, you rapidly discover that sales from the iTunes Store are far more healthy than Forrester’s data indicates – in fact, they are increasing not slumping.

    This article provides some interesting insight into this issue:

    and another perspective: img4…sicsalesyj9.png


  • Brian Peat:

    #1 This doesn’t take into account gift cards, of which I’ve probably received nearly $100 worth over the last year.

    #2 I personally have bought a bit less music over the last 6 months. Maybe others have too. If sales are down, it doesn’t mean piracy is up. I haven’t downloaded ANY music, let alone bootleg music.

    Gift card sales are probably going to go through the roof this season, so Apple has nothing to worry about.

  • I think you nailed it on the head!! That\’s the point that everyone here has failed to make, nice work!! I am going to place a link to you on my blogroll, ok?

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