“Two separate reports offer contrasting opinion on the health of the digital music market,” Jonny Evans reports for Macworld UK.
“Forrester Resarch analyst, Josh Bernoff has revealed figures that claim Apple sells 20 songs through iTunes for each iPod sold. He makes the assumption that this figure — which has remained relatively static historically — represents all legitimate music consumption by iPod users,” Evans reports. “Meanwhile, Akamai has published a global glance at the traffic levels across 40 digital music stores, including iTunes.”
“The Forrester figures aren’t based on actual sales, but on information Bernoff has been able to estimate that is based on credit card records,” Evans reports. “Over the past 12 months, 3.2 per cent of US households with internet access have purchased songs through iTunes, but only about $17 worth, his report claims. He also says the number of iTunes sales has slipped 58 per cent since January 2006.”
Evans reports, “Akamai’s report deals with known levels of activity on music websites. These contrasting results indicate that interest in digital music services continues to grow.”
“Akamai also conducted a survey of online consumers to better understand their digital music habits. Respondents ranged in age from 19 to 68 with a survey base of 200 people, 58 per cent female and 41 per cent male,” Evans reports. “The survey showed that 86 per cent of respondents own a portable music device and 76 per cent spend $1-$5 on music downloads every week. 82 per cent of music lovers prefer a download-to-own service to anything else, and 42 per cent of customers are loyal to one digital music service.”
Full article here.
Related articles:
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
As I keep saying, “There are lies and then there are statistics.”
These various analyses can be made to support whatever is needed to be supported.
Talk about twisting figures, only 3.2% of all households!! How many of those have an iPod? What type of internet access do they have? (try downloading with dial-up, I have.) Geez. More anti Apple FUD.
I guess this is a good thing, I was getting tired of only hearing good news.
My take is you are foolish to use a credit card to buy songs. Credit card companies charge you interest on the loan to buy a song (unless you pay it off monthly).
The only way to go is to use an iTunes card. You pay cash at Target or where ever and use it.
Seasonality. Gift cards.
If 1 billion people spent $17 each at my store I’d be pretty happy.
MikeR, my take is that I either use a VISA Check Card or an American Express charge card (which is paid in full every month) to make my purchases. My take is that driving to Target is for retards.
“…survey base of 200 people, 58 per cent female and 41 per cent male,”
That give us a total of 116 females and 82 males. I wonder what the other two are.
MikeR:
Wow – why wouldn’t you pay off your credit card each month? Did you calculate frequent flyer miles or other incentives? Did you consider the ‘cost of money’? You know, the loan you are giving to Target! What about the risk of losing the card or having someone steal the data (saw the story recently)? Maybe you could have left the money in a bank account drawing interest until the moment you wanted to make the purchase. Mike, you should consider taking some basic finance courses.
MikeR, if someone is spending so much on iTunes each month that it’s stopping you from paying off your credit card then I think they have bigger problems.
Obviously, there is no way to measure this. I have over 350 songs that I have purhcased over the past 3 years. Some with Gift Cards, but most with a credit card. My nephews have at least 100 songs each, mostly through gift cards. The teens are mostly purchasing their music through gift cards.
Posters on Slashdot have already ripped the Forrester research as pure bunk and stupidity.
I never use a credit card to purchase from iTunes… I know I use giftcards, and most of the other people I know do too.
Obviously, the analyst makes an error by only using credit card purchases.
However, if Bernoff’s data is specifically about iTunes, the Akamai data that Evans cites does not refute those claims. Unless I missed something, the Akamai data does not break down download traffic by store (note: Akamai does the streaming & downloads of many music stores, including iTS). It is possible, though doubtful, that iTS traffic is dropping even though overall legal downloads are increasing. Understand, it is not that I think Bernoff’s analysis is correct, but that Evans needs to have actual data for iTS to argue Bernoff’s conclusions.
Until the iTunes sells music with a decent sampling rate, preferably Apple Lossless… I’ll stick with buying CDs and ripping my own.
TommyBoy – I agree with you. Use credit cards wisely and you never have to pay a dime in interest.
FWIW I rarely buy from iTS. Main reason is the bit rate. Also buying CDs can be cheaper than buying an album on line if you know where to look.
However I do get the coolness of only buying songs that you like which I do occasionally.
This is still a developing industry and it’s good that Apple have the lead.
When Apple announce the 2B song sale then we will really know what the sales rate is.
credit card records? this stupid moron!!! A lot of people buy songs from iTune with gift cards which will not shown as crdit card records, RETARDED person!
I agree with Mr. Reese. But I’ll go a step further. I will never buy an album off of iTunes until it is lossless AND DRM-free. I’ll still buy singles, but the rate of buying those is decreasing very rapidly since I’ve pretty much bought all the singles I think I want. If they want me to buy an album, better give me a good reason to buy it instead of the CD. And 128-bit encoding with DRM is definitely not a step in the right direction.
So Bernhoff just guessemates while Evans actually gets the facts. And with the high sales of iPods I think I tend to go with Evans on this one. I usually don’t buy songs but Albums which totally blows Bernhoff’s guessing out of the water.
Bernhoff spreads the FUD and Evans spreads the facts.
It’s like anything else. Prior to iTunes I didn’t spend any money on music at all. My CD shopping had dropped to maybe $100 per year.
After iTunes and the iPod I became obsessed with how easy it was to find and download music to my computer and iPod.
One year I spent over $1000 on music.
I’m over it now. I’ve spent a lot on TV shows from iTunes but I have to want music to go look for it and strangely I’m not being exposed to new music, or even old music I might like. Same old problem.
In fact, my iPod is FILLED with podcasts! When I drive around LA, I love listening to different podcasts. TWIT, Mac this, Mac that, World of Warcraft podcasts, photography podcasts, etc. and so on.
Consider that Bernoff has a history. A history that says that all music sales should be via a flat subscription fee to the music companies. So he has a vested interest in damaging Apple’s sales model.
“58 per cent female and 41”
I wonder what that last 1% was………
(X-Files music playing)
MDN word: interest, as in…
Microsoft wants an interest-free loan whenever you buy music; unfortunately ther is no consumer interest.
I don’t know where that guy got his data, but i also have some data (ill leave it at that), and I can say definitively that there was no such drop off since january… itunes still has amazing growth, and there’s no explanation i could think of that would cause his supposed 58% drop… FUD FUD FUD…
TommyBoy,
That time of the month? Hope you stay out of debtors prison.
Down 58%?
(Not slowing growth, but DOWN more than half.)
Generally when a piece of data is such an outlier from other data points, the best strategy is to consider it an error and drop it.
65% is a MASSIVE drop off. If true, we’d see the effect in many other numbers: Apple’s own statement of how many cummulative downloads they’ve sold, Neilsen’s share of the download market, etc. etc.
Such mistakes can be made even by the honest (not that I know anything about this researcher.) Methodology, assumptions, even a spreadsheet bug. And misinformation easily arises from sloppy or math challenged journalists. For example: a 58% slowdown in growth (that is growing, but not as fast as before as a percentage of overall sales) would be expected as iTunes matures.
My explanations are purely speculative. But if do an experiment to calculate the force of gravity and you get a negative number, well….
(MW: probably. But in this case probably not.)
MikeR – “that time of the month?”
that’s…wow. that’s a dumb thing to say. i mean, in 6th grade you could get away with that…but…ever met a girl named tommyboy? no? then shut your cakehole about menses.
i stopped buying cds when i had a full set of coasters. the take up space, they’re needlessly expensive and i have nothing to play them on. cd players are a thing of the past.
Ooops.
I forgot the obvious explanation: seasonality. He’s not using year over year figures for what has become (not that it’s maturing) a very seasonal product. Not only are ipods seasonal, but one might imagine that iTunes gift cards would be even more so.
So maybe it’s not an outlier, just misleading.
Of course everyone with an agenda has already jumped on the number as proof of their point.