iTunes Store Seeing Revenue Crunch? [Updated]
The report is based off of an analysis of credit card transactions over a 27 month period. While the beginning of the period showed steady growth, months since January 2006 have apparently shown revenue decline as much as 65% (with the average transaction size falling 17%).
And it isn't just Apple's problem. Nielsen Soundscan has grimmer news for prospective digital download services, indicating three consecutive quarters of flat or declining revenues for the sector as a whole.
Speaking to The Register, Forrester analyst Josh Bernoff warned against extrapolating too much from the figures. It may reflect a seasonal bounce that hasn't yet manifested itself. However, it might not.
The report is surprising in that Apple has routinely given the impression that the iTunes store has been doing well. During Apple's 3rd Q 2006 conference call, Apple estimated that it had 85% of the legal download market. This year also saw the addition of full-length movies from Disney to iTunes, of which 125,000 were sold in the first week (generating $1 million in revenue for Disney during that time period).
Update: Forrester Research has issued a rebuttal to media reports on its research, saying The Register and other members of the press had not adequately weighed their research as a whole. In its rebuttal, Forrester claims that iTunes sales merely appear to be leveling off, and the decline felt earlier this year was most likely seasonal.
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I just can't make sense of the figure: is it that in general music sales have dropped so dramatically or is it that people are buying elsewhere ?
Any comments ?
Could more people just be using pre-paid gift cards?
Maybe. I know one person that buys a lot but only uses pre-paid cards. And I usually get a gift card or two a year that I use.
Still, I don't think that alone could account for that large of a drop.
Maybe. I know one person that buys a lot but only uses pre-paid cards. And I usually get a gift card or two a year that I use.
Still, I don't think that alone could account for that large of a drop.
Seconded - there's no way 65% of iTunes purchases are being made via gift cards.
Could more people just be using pre-paid gift cards?
I don't know... It feels like the entire article is a little hokey, so I don't know how much weight we should put into it. We know that Apple doesn't make a ton of profit off the store, but when they add $10+ movies and they sell at a clip of 125,000 a week, you can't tell me that they are loosing revenue THAT badly.
-Clive
The inital surge and the subsequent drop should have been expected.
Am I the only one who's a little creeped out by the fact that these credit card companies are crunching data on our bills about specific items?
That's exactly what worries me too. :mad:
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