News, info, and opinion by Mac users, for Mac users.

April 27, 2007

itunes_store

The difference between a cliff and a plateau

Posted Apr. 27, ’07, 4:50 PM PT by Thomas Gagnon-van Leeuwen
Category | iTunes » iTunes Store

plateaucliff.jpg

Article headlines are pretty much always exaggerated, but I think the phenomenon just hit a new high. On the other hand, according to Canadian newspaper National Post, iTunes Store sales just hit a new low. Or so they say.

When I see a claim such as “iTunes sales fall off a cliff”, I expect a reasonable level of evidence to back it up. In this case, the National Post’s reasoning is, err, interesting. Peter Nowak argues that Apple’s “music-related services and products” growth in revenue has dropped from 124% between 2005 and 2006 to 34% between 2006 and 2007. Remember, we’re talking revenue growth here, not revenue itself. What can a normal person conclude? iTunes is not growing as fast as last year.

But Peter Nowak claims iTunes sales are falling off a cliff. Or does he?

iTunes, which has more than 80% of the global market and is essentially synonymous with legal music downloads, is hitting a plateau after a few years of very quick growth. [emphasis added]

Hitting a plateau, or falling off a cliff? For your enjoyment, I’ve created a small comparison image of a plateau and a cliff above for you to decide if they are the same thing.

As for the claim that it’s hitting a plateau, that’s not really true: 34% growth is not a plateau. It’s not a 124% curve, but it’s reasonable growth. Enough with these misleading and untrue headlines.


4 Comments

Justin Ames said:

Not to mention that although percentage-wise 34% is much lower than 124%, a 34% growth this year is much more than it would have been last year. If $100 of revenue was brought in on itunes in 2005, that grew to $224 (a growth of $124) in 2006 and then that grew to $300.16 (a growth of $76.16) in 2007.

April 27, 2007 6:02 PM
spiderbat said:

One must also take into account that, if iTunes Music Store sales would keep increasing at a rate of 100% or higher every year for a few years more, then acquiring songs would become the full-time occupation of tevery human being on this planet!

April 28, 2007 2:41 AM
Jack said:

It seems these journalists need to go back to high school and relearn logarithms. Or perhaps they should be required to take calculus if they are to be allowed to talk about, not only rates of change, but second order rates of change.

April 28, 2007 4:49 AM
john said:

Misleading FUD is what I call this story. 34% growth means 34% increase in sales and not at a plateau. Quite an easy concept for most to understand. This guy doesn't even understand what he is writing apparently. To put it in terms for the writer to understand. That means the arrow is still going up ^ not leveling off >.

April 30, 2007 8:48 AM

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