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For six years, the Internet Nexus served as my technology blog, but I've since started blogging at the SuperSite Blog instead. If you're looking for the blog, please head there. --Paul

Saturday, September 16, 2006

A look behind the iPod/iTunes report

BBC:

Despite the success of Apple iTunes, few people stock their iPod with tracks from the online store, reports a study.

The Jupiter Research report reveals that, on average, only 20 of the tracks on a iPod will be from the iTunes shop.

The report reveals that 83% of iPod owners do not buy digital music regularly. The minority, 17%, buy and download music, usually single tracks, at least once per month.

Only 5% of the music on an iPod will be bought from online music stores. The rest will be from CDs the owner of an MP3 player already has or tracks they have downloaded from file-sharing sites.

The only salient characteristic shared by all owners of portable music players was that they were more likely to buy more music - especially CDs.

"Digital music purchasing has not yet fundamentally changed the way in which digital music customers buy music," read the report.

This is interesting timing. A friend of mine from a major software corporation (ahem) was just telling me that if you did the math on the iTunes Store, it really wasn't all that successful: On average, each iPod user downloads less than 10 items from the store, he said. This means that the majority of iPod users are probably just browsing around when they first get the device and then stop using the service after that.

Conclusions from this bit of information?

First, Apple must keep selling iPod hardware for its iPod/iTunes business to thrive. Clearly, that's worked out so far, in spades. Since Apple is basically breaking even on the iTunes Store, this service can be seen solely as an incentive to spur hardware sales. I wonder how well the music industry benefits.

Second, from a partner perspective, subscription services are actually a more viable business model, per user, than are a la cart downloads because these customers represent steady money and are more apt to discover new music. Granted, there aren't many of them yet.

Third, this market is obviously still in the early stages of development. So far, Apple has done what appears to be a fantastic job, but very few people, as a percentage, are going the legal digital music download route so far.

All that said, this doesn't make Zune all that much more attractive, frankly. But it does make me wonder about the long-term impact of the iPod. We're already seeing that new generations of iPods are just evolutionary updates of previous designs, and as many have noted, we're not likely to be surprised by new iPod features anymore. Sure, we'll eventually get bigger screens, wireless features, and onscreen controls. These are all pretty predictable. As iPod moves from gotta-have-it fashion accessory to all-too-common electronics device, it will be interesting to see if Apple can keep the momentum going. The good news, of course, is that Apple is pretty much the only company I know of that can probably make it happen.

[ Posted at 1:25 PM | Permalink ]