iTunes Sales Flat

By Richard Menta 12/12/06

Forrester Research released new data on iTunes sales, but unfortunately their outlook is not very optimistic with regards to the future of paid digital downloads. The company analyzed over 2,700 US iTunes debit and credit card transactions over a 27-month period and found that while monthly revenue increased between 2004 and 2005, since January monthly revenue reversed course and decreased by 65%. Forrester found that only 3.2% of online households purchased at least one download within the last year, most of them spending less than $20 for the period. Overall, the average iTunes shopper only makes about three transactions per year and the average purchase made in 2006 is under three dollars, 17% lower than the previous year. Overall, Apple sells 20 tracks per iPod shipped. Forrester analyst Josh Bernoff confided to The Register that it may be premature to make firm conclusions from the figures, however he added, "There's no indication of enormous growth coming".

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We have seen these figures before that show that only a small percentage of tracks found on the average iPod are purchased. Most are either ripped from personal CD collections or traded online. Bernoff's words suggest this is not going to get any better and that is problematic for a record industry that is looking for growth in the digital sector to offset steady declines in the sale of physical media. Holiday sales of iTunes gift cards should spark revenues up sharply, but as seasonal spikes give way to longer trends the landscape looks less promising. This puts more pressure on the major labels to make the adjustments necessary to entice consumers and that may require revisiting every factor from pricing to DRM implementation.

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