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Paul Nicholson
Nashvegas TN
Digital Marketing Manager at HealthTrust. Social media junkie, strategist, and app idea guy. Hockey fan, photographer, and father to 2 awesome boys.

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Wednesday, December 13, 2006

iTunes failure?

Apparently people are not as dumb as i thought. Not in the long term anyway.

Forrester Research just announced that the number of monthly iTunes transactions has dipped 58% since Jan '06, and average purchase size has declined by 17% - an overall revenue decline of 65%.

"It is too soon to tell if this decline was seasonal or if buyers were reaching their saturation level for digital music"
...or people are finally realizing that iTunes and iPods are a rip-off. They are upset that more and more of their friends are purchasing MP3 players that will work with subscription services. For just $14.99 their friends can access unlimited amounts of music. While iTunes users can only add 15 songs per month for the same price.
"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"
In other words, Apple gets charged a certain amount per transaction, so when the purchase size goes down, it hurts profits. Overall sales going down obviously hurts too. Apple's cash cow is hurting.

I am not trying to revel in the failure of Apple, i am honestly happy that consumers may finally be realizing that iTunes is not a good deal.

(I have to get back to work, i'll probably right more on this later.)

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