No Growth In Digital Music Sales?

I was shocked to read in yesterday’s Wall Street Journal that sales of music online were slowing.

In a story about Yahoo (YHOO) offering songs from Norah Jones and Relien K that will play on any portable music device, it was stated "digital sales have stalled." That just didn’t make sense, given the continually strong sales at Apple’s (AAPL) iTunes Music Store.

But it is true this year, quarter to quarter, as the chart shows.  But it's better than last year. But, if you compare the third quarter of 2005 to the second quarter, you'll see digital sales actually fell.  In '06, there was no fall off.  Year-to-year comparisons show lots of growth. 

MacDailyNews.com was also was surprised by the story.  "Each individual quarter shows healthy year-over-year increases there is no evidence whatsoever that 'digital-music sales have stalled,” it said.  The blog predicted the fourth quarter this year will be a record setter, with a strong first quarter in '07, too, thanks to people cashing in iTunes gift certificates.

The Associated Press picked up the story today, adding that during the summer tracks from Jessica Simpson and Jesse McCartney were available in the unprotected digital format from Yahoo.

Disclaimer: I own shares of Apple Computer.

Comments

[Davis Freeberg:]

It would be interesting to see this same graph only for the sale of CDs instead of digital files. Somehow I doubt that people are shifiting back to discs, which really makes you wonder why there would be a drop in demand.

2006 Dec 07 10:47 AM

[David Lentz:]

Luckily for AAPL stockholders, Apple makes a lot more money selling hardware than selling media content.

2006 Dec 07 12:24 PM

[Tom B:]

Precisely. Having held an iPod for over a year, I think I have only about $5 of paid content. The rest is in the form of free Podcasts.

2006 Dec 07 01:23 PM

[reinharden:]

I believe in the last conference call Apple claimed that there was some seasonality in the 3rd quarter sales in that there were

1) comparatively fewer new releases in July/August/September

2) possibly some impact from school being out for most of the quarter (although over time I personally think that that might go the other way)

I also don't recall any "must have" music being out this summer. But I'm the wrong person to ask about that. ;-)

reinharden

2006 Dec 07 08:43 PM

[Jim Grey:]

I've noticed CD's now are packed with more songs than before. Also, the quality of the songs are better as well. In some case, if you add the number of songs together, it's cheaper to buy the CD than downloading each song.

2006 Dec 08 12:07 PM