Forrester: iTunes Sales Fell 65%; Analysts Disagree

Since January 2006 the number of monthly iTunes transactions has declined 58%, while the average size per purchase declined by 17%, leading to a 65% overall drop in monthly iTunes revenue, according to Forrester Research survey among North American consumers.

Forrester analyzed 2,791 U.S. iTunes debit and credit card purchases made between April 2004 and June 2006 from the research firm's consumer panel. Of all online homes, only 3% buy music at Apple's music store, and of those most continue to buy most of their music on compact discs.

Apple got $452 million in sales last quarter from music sold through iTunes as well as accessories for its market-dominating iPod device. Forrester said that the entire category of digital music made up just 4% of U.S. music sales in 2005. 

Analysts Disagree:

Steve Lidberg, an analyst at Pacific Crest Securities, said in a note today he doesn't see a slowdown in digital music sales, citing other data from researcher SoundScan that show weekly digital album sales have more than doubled to date.  

Piper Jaffray analyst Gene Munster wrote in a research report that the number of songs sold per week on iTunes had risen 78% in the first nine months of 2006 compared with the same period in 2005. Piper Jaffray said songs sold by iTunes totaled 695 million from January through September, amounting to about 18.5 million per week.

"Contrary to recent reports suggesting sales on iTunes are declining rapidly, our analysis of Apple company data ... shows strong growth (year over year)," Munster wrote.

Apple started iTunes in April 2003 to help broaden the iPod's appeal. The iTunes store offers more than 3.5 million songs, 250 TV shows, 9,000 music videos and 100 movies. Apple has sold more than 1.5 billion songs through the site and said it sells more than 1 million videos a week.

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