Blackfriars’ does the math: Apple iTunes sales are not ‘collapsing’

“I always enjoy Forrester’s Josh Bernoff’s writing and analysis, but we often don’t see the same data the same ways. So when I read yesterday’s New York Times quick article claiming that iPods aren’t driving iTunes sales, I decided that they must have misquoted him. When I saw today’s article in The Register claiming that iTunes sales are collapsing, I decided there was enough silliness being repeated over and over that I had to run some numbers myself,” Carl Howe writes for Blackfriars’ Marketing.

In his full article, Howe graphs cumulative iPod and iTunes sales on a logarithmic scale.

Howe explains, “A gradually tailing off curve generally still implies substantial growth — iTunes sold a billion songs just in the past 12 months. So the first takeaway from the above curves should be that both the iTunes and iPod sales are growing dramatically… In December 2003, iTunes had sold about 25 million songs for 2 million iPods, or a ratio of about 12.5 to 1. Today, that number is more like 23. So songs per iPod have actually grown over three years.”

Howe writes, “The bottom line: anyone who claims iPod sales are collapsing can’t do basic math.”

Full article here.

[Thanks to MacDailyNews Reader “LinuxGuy and Mac Prodigal Son” for the heads up.]
Howe is right. Obviously.

Related articles:
iTunes interest climbs as one analyst claims falling sales – December 12, 2006
Akamai Net Usage Index for Digital Music measures real-time global consumption of online music – December 11, 2006
WSJ mistake: ‘digital-music sales have stalled for the first time since Apple launched iTunes Store’ – December 06, 2006
Digital downloads drive world music sales in first half of 2006 – October 13, 2006
Study reports the obvious: most music on iPods not from iTunes Store – September 17, 2006
Apple iTunes Gift Cards help boost growth of digital music in U.S. – April 21, 2006

30 Comments

  1. Hmmm. I totally agree. “Figures don’t lie, but liers can figure.” ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    Its like noting how sales slow down after the first of the year, as compared to christmas. What kind of moron fails to take in the changes that occur over the year when looking at sales numbers??

    You can look at numbers to learn something or to prove that your guesses are right. What you do, shows what kind of person you are and how much you can be trusted. ” width=”19″ height=”19″ alt=”grin” style=”border:0;” />

    N.

  2. The data released by apple is very vague on purpose-
    They release itunes data at different times that they release ipods sales figures –

    Here’s what we see from Blackfriar’s graph

    It took apple 7 months (from july 05 to Feb 06) to sell 500 million songs –
    and they sold about 25 million ipods in that period –

    It also took apple the last 7 months of data (from feb 06 to Sept 06) to sell 500 million songs –
    and they sold about 15 million ipods in that period (the slowest ipod buying season)

    Less ipods sold, but the number of itunes songs stayed the same.

    Seems like more itunes songs per ipod to me….

  3. Regardless of actually numbers. You wont always be able to sell 5000% more quarter after quarter. Just because you sell 2 billion something one day then 1.99 billion the next doesnt mean the sales are falling. you still sold 1.99 billion!!! its immpossible to have a constant rising, it has to end at somepoint.

  4. It doesn’t seem that iTunes sales are collapsing but…

    It also doesn’t seem like iTunes sales PER USER are ramping up significantly.

    What we need to know is:

    How many unique active iPod users there are.
    What is the current rate of downloads.

    I think it is safe to assume that there are an average of 2 iPod per person. I have 4 iPods (1 was a freebie), but only 1 iTS account.

    Let’s also assume that roughly 3 million DLs occur per day.

    With those assumptions about 25 Million users DL 3 M songs per day or 1 Billion per year. That means each user DL about 40 songs per year.

    In Dec 05 ~ 30M iPods had been sold and ~ 750M songs sold. With ~20M users and 2M songs per day, than means ~ 35 songs per year.

    So more than likely sales per person isn’t increasing that much, although Apple are getting more users to use the service.

    This could mean that growth of iTS will come from mainly new users rather than increased sales per person.

  5. A nice job.

    However, here is one point wehere I may agree with Bernoff:

    “So when I read yesterday’s New York Times quick article claiming that iPods aren’t driving iTunes sales,”

    Sure, there is a correlation between iPod sales and iTS sales. That does not mean one is driving the other. I believe that iPod owners that wish to buy songs by download from stores that use DRM (not all do), then they choose iTS. That is different than saying the iPod drives the sales, which implies that one buys downloads because they have an iPod. An iPod might affect which store one buys from, but that is different than saying that it causes one to buy downloads. This disconnect is supported by the fact that the majority of tracks on iPods are from CDs.

    Analysts need to really get it through their heads that just because you can sync an iPod to iTunes and use the iTunes stores, does not mean that they are intrinsically related.

  6. i have over 1,000 itunes tracks and no ipod. my 17″ powerbook works just fine as a big ipod that also lets me write code, surf the web, keep track of contacts, maintain a calendar, write documents. and an extra battery for good measure.

Reader Feedback

This site uses Akismet to reduce spam. Learn how your comment data is processed.