Forrester Research’s Josh Bernoff sets the record straight. Why it took until today is anybody’s guess, but for those AAPL buyers who were looking for a nice artificial buying opportunity, Christmas came early this year.
Bernoff explains, “We put out a simple little report about iPods and iTunes based on credit card transactions and publicly stated Apple data. And for those who aren’t Forrester clients, I blogged the highlighs. In case you are wondering, we ran the report by Apple, and they declined to comment. Since then: The New York Times ran a little fairly balanced pieced on the research. This got us on the media’s radar screen. Then…”
Bernoff details the hysterical media headlines and writes, “Now for the record, iTunes sales are not collapsing. Our credit card transaction data shows a real drop between the January post-holiday peak and the rest of the year, but with the number of transactions we counted it’s simply not possible to draw this conclusion… as we pointed out in the report.“
Bernoff writes, “Apple’s stock actually did plummet — 3%. I started getting calls from hedge fund managers. Apple’s spokesman called and, although they refuse to go on the record with any facts, they’re clearly upset. And I also heard from the Chicago Tribune, San Francisco Chronicle, LA Times, Financial Times, Toronto Globe and Mail, thestreet.com, etc. At this point I was trying to get people off the ‘65% drop’ idea and onto some of the more interesting ideas in the report, with mixed success.”
Bernoff writes, “iTunes sales are leveling off, the Journal did an article about it last Friday with data from Soundscan. Apple is not in trouble — it makes its money mostly from iPods, and iTunes is just a way to make that experience better. It’s the music industry that has to worry, since the $1 billion a year or so from iTunes, globally, doesn’t nearly make up for even the drop in CD sales in the US, which are now down $2.5 billion from where they were.”
MacDailyNews Take: That what happens when people aren’t forced to buy 8 filler songs and can go buy the album’s two good songs individually. Too bad, music labels, your free ride on the back of forced crap music bundling is over. (Years of $15.99 for a decent song or two was criminal.) Make good music, make good money. Make better music, make better money.
Bernoff continues, “Finally, a word for Apple. Apple is extremely stingy with information about their business and public comment. Their unwillingness to comment on the record or off about anything they’re working on or any industry results beyond the basic statistics fuels speculation, pro and con, from their supporters and detractors. In the research business we like facts — and every other technology company is more open with them. So maybe it’s time for Apple to share a bit more. When the real bad news hits — and it’s inevitable, no company gets everything right — that openness would pay off.”
Full article here.
Bernoff, in part at least, is responsible for generating the “real bad news” and he has the gonads to blame Apple? Whatever, Josh. Other analysts seem to do a good job of covering Apple with the information provided and what they can gather without causing hysterics, PiperJaffray’s Gene Munster, for one example. You know, the guy who’s out there cleaning up your mess. And we don’t care what you like or want; obviously, neither does Apple. Thanks for the buying opportunity, though.
As for the various outlets that blew the whole thing up into Glaser-like proportions, that’s unfortunately what some in the media do. Many in the media can’t even get basic product features (that are clearly listed on websites like Apple’s) correct. “Press credibility” plummeted long ago. Bernoff should have known what his original blog post would cause; no crystal ball, just common sense required.
Related articles:
Jim Cramer on Apple iTunes Store and ‘that stupid Forrester survey’ – December 13, 2006
Piper Jaffray: Apple iTunes Store sales show strong year-over-year growth – December 13, 2006
Apple on Forrester report: ‘the conclusion that iTunes sales are slowing is simply incorrect’ – December 12, 2006
Blackfriars’ does the math: Apple iTunes sales are not ‘collapsing’ – December 12, 2006
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
Ouch! That Microsoft is one scary company.
Create a panic. AAPL goes down 3%. Then buy low, and wait until the stock rebounds. Humm. I wonder how much he made on that deal.
Andrew
As for the various outlets that blew the whole thing up into Glaser-like proportions
—
Thurrott?
Relax kids. This was good for us.
Well. Good for AAPL.
Merry Xmas, fund managers. Welcome a aboard. Next stop, revenue.
=)
Hang on tight, honey.
The only way is up.
-c
MW: ‘placed’ (at the pad, ready for launch)
The real problem for the music industry is that there simply isn’t all that much good music coming out these days. People don’t go buy a lot of mediocre stuff. Put some good artists, stop with all the bubble-gum pop that sounds the same (probably because it’s written by the same 3 40-something men), and let artists innovate. Then you’ll get some good new tunes, and people will buy them again.
This is a very big problem for the Music Industry.
(in caps)
That much is true.
-c
MW: ‘chance’ (encounter, as we say in Middle Earth)
Actually, if you do a Google search on Bernoff and Apple, you come across quite a few articles with dumb-ass comments from Bernoff.
He’s definitely not one of the brighter bulbs in the dim bank of lights called analysts.
Bernoff has stated:
1. on 10/16/2003 at NPR, that iTunes would not be dominant on Windows because it wouldn’t be alone.
2. on 7/26/2004 at CNET when Real broke into FairPlay, that “Right now if you’re a consumer, you have to pick sides,” said Forrester Research analyst Josh Bernoff. “With every track you buy you’re going further down the path of incompatibility…This is going to create some pressure on Microsoft and Apple to provide similar levels of interoperability.”
3. on 7/26/2004 at the NY Times, “Mr. Bernoff said this technology might give a temporary advantage to RealNetworks’s music store, which has a very small share of the market so far. But he thinks Microsoft will also find a way to sell songs to be downloaded on iPods. … Mr. Bernoff said he expected Microsoft quickly to become the No. 2 download service behind Apple.”
4. on 2/24/2005 at Forrester, he writes “Steve: We know conventional wisdom means nothing to you. But the road to mass consumer success goes through video. Hire TiVo as your driver.”
5. on 2/4/2005 at Forrester, he writes a subtitle “”Napster To Go” Will Take A Bite Out Of Apple iTunes.”
5. on 8/17/2004 at Forrester, he writes “RealNetworks will unveil its “Freedom of Choice” marketing push today, featuring $0.49 singles, $4.99 albums, and a message that Real has the only music store compatible with both iPods and Windows Media portable devices. The result: a major challenge to Apple, a boost for Windows Media, and a new imperative for music labels: Back Apple rivals to break down compatibility barriers.”
6. on 11/8/2005 at Forrester, he writes, “As we predicted, TV distribution has been cracked wide open. For $0.99, you’ll now be able to watch CBS hit shows on Comcast ON DEMAND and NBC Universal programs on DirecTV pay-per-view. The result: Digital cable and on-demand usage will surge. And the TV schedule will soon be as irrelevant as last night’s news.”
This goes on and on; not a single one of the above views has come true. I think we need to out Bernoff as a dim analyst with an Apple axe to grind. He’s not as objective as he makes it all sound by blaming the press and Apple for his latest mistake.
“not one of the brighter bulbs in the dim bank of lights called analysts” haha…Well, if Apple doesn’t give you the info you need you need to invent it. One way to do it is to pick something in the market that gives some kind of indication and then claim it’s the whole truth. In case of media backfire you can always go back and point fingers to your sources.
“The real problem for the music industry is that there simply isn’t all that much good music coming out these days. People don’t go buy a lot of mediocre stuff. Put some good artists, stop with all the bubble-gum pop…”
The REAL problem is kids aren’t making any good music. Don’t blame the labels when all kids want to do these days is endlessly rehash and copy the music their granddads were playing back when they were young people in the 1960s. It’s no wonder no one wants to buy it.
There’s plenty of good music out there, however, precious little of it is on major labels…
A day after Bernoff’s story appeared saying everyone got it wrong, Google News is rife with stories saying iTunes sales are plummeting. These stories are everywhere!
Bernoff has to be an M$ shill, and he wouldn’t be the only one because market watchers are nothing if not lemmings. Microsoft can’t complete with the Zune so it’s embraced the tactics of the old Soviet Union.
It would be interesting to know how much M$ paid him and Forrester Research for this wall-to-wall publication of lies.
Twenty Benson
No offense, but musicians today are definitely NOT parroting crap from the 60’s. Me thinks you have been out of the music scene for quite a while. Although I would agree there is a lack of originality in Pop Music, due to the use of samples and such. Rock is making a strong comeback thru bands such as Trivium, Lamb of God and Dragonforce. Hardly rehashes of 60’s music…
Doh! Last year in the Christmas quarter, Apple sold around 14 million iPods, I believe. Doesn’t this mean a ton of iTunes music sales in January because tons of people are trying out their iPod for the first time and buying music for the first time?? So, to me, there would be automatically less sales after that first time buyer January peak. Everybody just watch it happen again after this Christmas season. And how is it iTunes problem when the competition isn’t picking up those supposed sliding numbers. It is the record industry as a whole. Lately, on the radio, I hear only two songs that I would run out and purchase. I am so sick of these bands
that every lead singer sounds like a cross between Hootie and the Blowfish’s singer and Dave Matthews. Then, combine it with two heavy rhythm guitars and absolutely no decent lead break. Every song is the same. People get tired of lack of distinction. The hook in songs are gone, and the record companies mold and choose their stars and choose their tax write-offs. THIS leads to less songs purchased.
Unreality Check,
In other, less kind words, I would concur with your conclusion.
Remember, MS literally has the entire planet by the balls. Of course that’s no one’s fault but the people who continue to buy and promote MS products, primarily Windows and Windows services.
In Apple’s conference call in Jan, I think they specifically highlighted that iTS had booming business between Christmas and New Year’s. It was mentioned particularly because last year, that was the extra 14th week in the quarter.
So yes, all those iPods and iTunes cards as gifts spurred mega-redemptions right after Christmas. It’s no surprise to anyone except Forrester that the peak is right there.
So iTunes is growing, but it’s not booming in a way that the growth would cause June sales to surpass the peak in January. But iPod sales in June don’t surpass those in Dec anymore either.
Georgy Porgy:
Not just iPod sales driving iTMS song sales, but the millions of iTMS gift vouchers opened on Christmas morning will be registered and spent in the following few days.