iTunes: Up or Down

I posted last week (iTunes iNtrouble?) about a report by Forrester Research that, according to The Register, Bloomberg, and others, disclosed a collapse in iTunes’ sales in 2006. The claims of trouble at iTunes “threw the cat among the pigeons,” as a boss used to say. Apple shares dropped almost 3% after Orlowski’s story, others claimed iTunes 2006 sales are “surging,” and the report’s author criticized the media for taking one sentence of the report out of context. Which figures are correct? It is hard to say since Apple does not report iTunes sales separately. Analysts look at other official Apple figures or figures from other sources to deduce iTunes sales trends and, not surprisingly, different sources yield different conclusions. For instance, the Forrester Research report is based on 2,700 debit and credit card transactions. Carl Bialik, The Wall Street Journal’s “Numbers Guy,” examined the different methods here. (Subscription required)

Commentary branched off from there. Andrew Orlowski’s December 12 article in The Register pointed to digital rights management as a cause of Apple’s declining sales, a theme reiterated by others: ” . . . the metrics are beginning to support the notion that DRM, at least in part, is actually driving people away from Apple’s music store.” (Joe Lewis, Webpronews.com) Orlowski spun another strand, predicting the advent of blanket licenses in which users subscribe to online sites for a small fee and obtain “the right to exchange music freely” and licensors (artists and labels) divvy up the pie in some equitable fashion.

Others attacked Orlowski’s article. In the “‘Collapsing iTunes Store’ Myth” RoughlyDrafted.com characterized Orlowski’s blanket-license model as a “socialist fantasy” mandating a “Soviet style choice:”

The point was not just to create a sensationalist article, but to use it as proof for later articles that followed a preset agenda: iTunes can’t succeed, because Orlowski has other ideas in mind about how to distribute the world’s music.

RoughlyDrafted.com links to a chart and analysis from Blackfriars Marketing of Apple sales supporting the Apple press-release claim that iTunes’ sales are, um, just peachy. Absent actual Apple iTunes sales figures this dispute is mostly noise, revealing more about the use of the Internet to flog a topic into tiny pieces than about iTunes’ sales or the future of digital music. Google, for example, produced over 10,000 hits for “apple ‘itunes sales’ ‘forrester research report.'” I don’t have a dog in this hunt. I’m neither confident of iTunes’ imminent downslide nor optimistic about its continued dominance over the music download market, merely curious about how the future unfolds and how we perceive it.
It reveals something else, too: the passionate, minute interest in the present and future of digital entertainment. It’s hard to imagine a report of, say, declining sales of Sony HDTVs provoking the same type of commentary.

3 thoughts on “iTunes: Up or Down”

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