Apple iTunes Music Store, while an unqualified success in the online retail music arena, is but a drop in the bucket when compared to the music industry’s overall annual revenue. To put iTMS revenue firmly in perspective, at the current sales pace, the iTMS would generate annually about 3/4ths the revenue vinyl (yes, vinyl) records generated in 2002.
“‘It’s a small but reasonable audience, which is very encouraging,” Interscope Records chairman Jimmy Iovine told Warren Cohen of RollingStone. “It’s our first real offensive move in this area.”
“Although these initial numbers are impressive, they represent a small portion of the music industry’s $11.5 billion annual revenue. At this pace, the labels stand to earn about $33.8 million from the iTunes Music Store this year, which lags behind the $45.4 million that vinyl records brought in last year. Even if Apple continues to sell a million downloads a week for the next year, revenues won’t match the collective projected take of subscription services such as Pressplay, MusicNet, Rhapsody and Musicmatch, according to technology-research firm GartnerG2. That’s because the subscription ventures operate on the Windows platform, and U.S. users of Windows PCs outnumber Macintosh users by twenty-five to one,” reports Cohen.
Cohen continues, “So far, due to ongoing piracy concerns, only two of the five major labels have reportedly signed deals allowing Apple to develop a Windows version. Those concerns are likely to grow now that hackers have found a way to use iTunes software to share music. But Iovine believes creating a Windows version is worth any risk. ‘Whoever doesn’t license music for this is crazy,’ he says. ‘It’s a huge mistake.'”
Full article here.