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December 11, 2006

itms

Stock blogger should stick to stock in trade

Authored by Dan Moren at 9:16 PM
Category | Music » iTMS
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Music ThiefHere’s another oft-repeated fallacy that needs to be quashed: iPod owners are thieves. The latest allegation comes from Blogging Stocks writer Matthew Himler. As evidence, Himler cites a Forrester Research report showing lackluster sales for the iTunes Store. Unfortunately, he doesn’t seem to have read the details closely. Here’s what he somewhat confusingly reports:

Forrester Research issued a report last week declaring that the 3% of households that have purchased music from iTunes store spent a total of $35 for the year [emphasis added], and half of them spent only $3 or less at a single time.
Besides the confusing wording, the statement above is also inaccurate. I looked up the actual report (or the abstract for it, since I don’t have $249 to shell out for a 14-page paper). Here’s what it says:
Forrester’s recent analysis of more than 2,700 US iTunes debit and credit card transactions reveals that 3% of online households made an iTunes purchase in the past year. Apple’s iTunes proves that $0.99 micropayments for digital music can lead to substantial revenue; buyers spent an average of $35 [emphasis added] at iTunes over the past year…With half of all transactions costing $3 or less…
It’s been a while since I took statistics, but as I recall, there is a bit of a difference between a total of $35 and an average of $35.

Himler continues on with foggy assertions, speculating where-oh-where these iPod users get their music:

My best guess is through the illegal peer-to-peer networks, which continue to give the music industry its biggest challenge to greater profitability.
Notably absent is any mention of probably the biggest source of music for iPod owners: CDs that they already own.

I don’t find it hard to believe that the majority of iTunes users don’t spend a lot on music (taking the crazy $8000 guy as an outlier); I haven’t bought music from the iTunes store in over a year—then again, I’m not a big music customer in the first place. Still, I do know people who use the store quite heavily, and Apple has moved over a billion songs.

Forrester asserts that since half of the purchases are under $3, the credit-card transaction fees could quickly make iTunes “unprofitable.” That said, Apple’s Q4 financials reported that the store was running above break-even. Either way, it’s little excuse for calling iPod owners thieves.


Comments

How quickly we forget the most popular method of music distribution.

Posted by: Dave | December 11, 2006 10:04 AM

It drives me nuts when people make assumptions like this. I have approx. 4+ GB of music on my iPod. I would say that less than 1 GB of that is iTunes-purchased tracks. *Everything else* came from CDs that I've owned-- some as far back as 1995 [I know that was only 11 years ago-- and I was only about 12 at the time].

First Universal pitches enough of a fit to demand $1 from every Zune [giggle] sold, and now this.

Posted by: Kate | December 11, 2006 11:57 AM

The Music industry must be absolutely killing themselves over the "fair use" provisions. Fair to whom? The problem they have is twofold - CD's are durable and the music is high quality (i.e. no re-purchasing incentive like VHS->DVD->HD/Blu DVD). Furthermore, CD ripping with iTunes is so simple and of a (user controlled) quality sufficient for any purpose.

They badly need an innovation with music purchases which will motivate people to ditch CD and re-purchase. Naturally it (anything new) will have "friendly" DRM. The answer lies in music video (somewhere).

-- Happy iTunes user who has all his 150 old CDs ripped to iPod but who resents the 200 casette tapes that havn't made the jump.

Posted by: Gerard Byrne | December 12, 2006 01:43 AM


Looks good! Well done. All the best!
- www.macuser.com g
spaghetti alla carbonara

Posted by: Uhbygctfx | December 29, 2006 09:14 AM

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