iTunes only ‘appears’ to be fading

A recent study by Josh Bernoff of Forrester Research suggests that iTunes sales have been going down sharply as the data indicates that the number of songs purchased from Apple’s iTunes store, per iPod sold is not accelerating.

The number has been held steady at about an average of 20 songs per player.

The report is based on a small sample and it does point out that it's too early in the digital music era to draw conclusions about the practices of online music buyers.

A piece of the report reads, "Since January 2006, the number of monthly transactions declined 58 percent, while transaction size fell 17 percent, leading to a 65 percent overall drop in monthly iTunes revenue. With only two years of full data, it is too soon to tell if this decline was seasonal or if buyers were reaching their saturation level for digital music."

Bernoff believes that the music industry does not hold iPod as a revenue generating machine for it. iTunes sales could be expected to accelerate at a faster pace than the iPod if owners continued to purchase music for as long as they own the player.

Forrester's report concluded that the number of monthly iTunes purchases per 1,000 households declined by 58 percent from January 2006 to June, Bernoff said.

But Michael Constantinos, a graduate at Johns Hopkins university graphed the growth of music downloads from the iTunes Store using publicly-available data from Apple and reported that Apple will exceed the 2bn songs mark some time next February, and that the announcement of 1.5bn downloads, made in September, was "pretty much on schedule".

To the surprise of most, they are both correct. The downloads do go up, but only in January because everyone tries to benefit from the iTunes gift vouchers that they get for Christmas.

Although Bernoff correctly reported that downloads from iTunes plummet after January, his analysis failed to spot the voucher purchases which raise the number of downloads making the following months look dull.

And as for the reluctance in customers to commit to downloads, it is probably because of the same or lesser price of the physical CDs.