Recent Survey Suggests iTunes Music Store Sales Have Declined 58% In 2006
U.S. market research group Forrester conducted a survey of North American music consumers and believes that since January 2006 the number of monthly iTunes transactions has declined 58 percent, while the average size per purchase declined by 17 percent, leading to a 65-percent overall drop in monthly iTunes revenue. Forrester analyzed 2,791 US iTunes debit and credit card purchases made between April 2004 and June 2006 from the research firm’s consumer panel. Apple’s iTunes Music Store is the most popular online music store in the world.
The decline comes after a period of strong growth. The number of monthly iTunes transactions grew sevenfold, from just over two transactions per 1,000 households in April 2004, to nearly 17 during January 2006. Over that period, the average transaction size almost doubled, to $6.69 from $3.55. Most consumers buy just a few songs at a time, while the average is boosted by a smaller number of heavy buyers according to the results. Of all online homes, only 3 percent buy music at Apple’s music store, and of those most continue to buy most of their music on compact discs (CDs).
“Only Apple knows just how much profit there is at the end of the day on a $1.98 credit card transaction for two songs, but with transaction costs, hosting costs, and the wholesale price of the songs, there’s not much margin left,” Forrester said. Apple said it has sold over 1.5 billion music tracks and tens of millions of TV shows and movies. “Although Apple is the dominant leader in the digital music industry, the entire category of digital music made up just 4 percent of U.S. music sales in 2005,” Forrester said.