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December 13, 2006

itms

Rumors of iTunes sale "collapse" are greatly exaggerated

Authored by Dan Moren at 10:37 AM
Category | Music » iTMS
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The End is Nigh!Go skim the top headlines for Apple news today, and you’ll see one excited phrase cropping up over and over again: “iTunes sales are collapsing!” The news media has jumped on this idea like it’s a super-powered trampoline. If they got any more excited, they’d be roaming the streets, holding hand-painted signs scrawled with doomsday predictions and Bible verses. Is the sky really falling, or have these Chicken Littles just decided to jump on the latest bandwagon (to totally mix my metaphors)?

All of these stories cite the same source, the Forrester Research report that we mentioned yesterday, which discusses the buying habits of approximately 2,700 iTunes consumers. The report alleged that iTunes sales have dipped in the first half of 2006, and it suggested that perhaps “even at $0.99, most consumers still aren’t sold on the value of digital music.” But even it didn’t go so far as to allege iTunes’s “collapse”—for that, we have the media to thank.

But how true is it? Blackfriars’ Marketing’s Carl Howe disputes the idea of collapse (twice), saying that “anyone who claims iPod sales are collapsing can’t do basic math.”

The rate of song purchases is going to change month-to-month, and Forrester’s data shows that. But the iTunes Store is the fourth largest online retailer of any type and is selling almost three million songs a day. And of course, none of that counts revenues from TV shows or movies either, each of which amount to millions of dollars of revenue per year. If that’s a collapse, I don’t know what these authors consider success.
The Forrester research also does not account for gift cards, or markets outside the US (though the US is far and away the largest consumer of the iTunes Store). Analysts at Piper Jaffray also disagreed, and, of course, Apple took issue with the findings, though it refused to release any concrete numbers to prove its point.

This kind of thing is dangerous, if only because it could become a self-fulfilling prophecy, encouraging people not to shop at the iTunes Store. Apple’s stock did dip on the news, but it has rebounded somewhat today. My opinion? Pay no attention to the man behind the curtain.

Update: The author of the original report, Forrester analyst Josh Bernoff chimes in, reiterating what I said above: “Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it’s simply not possible to draw this conclusion”.


Comments

I have just emailed the BBC about this story about almost bogus, after reading macuser story.

I'm personally sick to the back of my teeth reading miss information on the BBC website about Apple.

Please please please guy make a complaint to the BBC about their story being wrong and miss leading.

Also drop in that they keep printing stories that are wrong about Apple.

Posted by: Chris | December 14, 2006 01:58 AM

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