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On declining iTunes Store sales

David Chartier

The Register rang the town bell this week, pouncing on a report from Forrester Research which declared that iTunes Store sales are on the decline. Forrester analyzed 27 months of credit card transactions to conclude that revenue has fallen 65 percent since January 2006, and the size of the average transaction has dropped 17 percent. These numbers, however, don't take into account transactions like gift cards and gifted music, and I have a sneaking suspicion they might also have omitted other popular services like PayPal, which can be tied directly to a customer's banking account, bypassing credit cards altogether.

Apple is notoriously tight-lipped about the performance of their 800 lb gorilla iTS, but MacNN notes that Apple reported 'above-break-even' profits for the store during last September's earnings conference call. Considering the iTS has long been known as a paper-thin profit loss-leader to sell iPods, as well as the possibility that the neglected portions of iTS transactions could shift Forrester's findings, I'm a bit skeptical of these reports.

Of course, The Macalope asks 'who cares?' to all this worry of how the iTS is doing, but Geoff Duncan at Digital Trends reminds us of some interesting potential shifts in the digital distribution model that could depend directly on how well present offerings fair. Microsoft opened a Pandora's box by agreeing to pay the labels $1 for each Zune sold, and there are rumors that the jackass labels might be using this to pressure Apple into a similar deal. On an even broader scale though, Geoff also mentions something called 'blanket licensing' where said jackass labels could apply a tax to broadband subscriptions, allowing users to continue to freely download content over any network or service they use.

We will undoubtedly receive an updated performance report on the iTunes Store from Stevie at next month's Macworld. If anything, Forrester's report and the resulting discussion might signify a new wave of interestingness in the sea of DRM and digital distribution. Stay tuned.

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