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12/14/2006
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Are iTunes Sales Up Or Down?

Market researcher comScore refutes iTunes sales are down, saying they're up 84%.

Another market research firm is refuting media reports that Apple Computer's iTunes music store is in trouble, claiming that sales on the site have risen 84% compared with last year.

ComScore Networks issued its report Thursday, one day after Forrester Research said several media organizations had gotten the story wrong when they reported that iTunes sales had plummeted 65% in the first half of the year. Those reports were based on a recent Forrester Research study that the researcher says was misinterpreted.

But while Forrester claimed that iTunes sales were leveling off at roughly 20 songs per iPod, Apple's digital music player, comScore's research showed that in the first three quarters of the year, revenue on iTunes soared by 84%. In addition, the number of transactions jumped 67%, and the amount spent per transaction was up 10%.

ComScore also found that the number of unique visitors to iTunes had increased 85% year-over-year in November to 20.8 million.

"The reason to put this out is to contrast our numbers with reports saying iTunes' death is pending," comScore analyst Michael Rubin says. "Revenues grew a robust 84%, year over year, and that's pretty healthy growth."

While Forrester wouldn't argue about iTunes' general health--the site sells about $1 billion worth of songs a year--it would take issue with the growth estimates. Based on data pulled from credit-card transactions, Forrester found that Apple has sold about 20 songs per iPod since the digital music players went on sale.

The erroneous media reports were based on a sampling of transactions that showed a sales decline. Forrester, however, said the sample was too small to accurately determine performance.

ComScore based its findings on the transactions and browsing behavior of 1 million consumers who have given permission to be monitored. The sales findings were based on 8.5 million transactions.

ComScore pointed out that its findings aligned closely with a report from Gene Munster, analyst with investment banker Piper Jaffray. Munster says the number of songs sold per week on iTunes had risen 78% in the first nine months of the year, compared with the same period a year ago.

"Contrary to recent reports suggesting sales on iTunes are declining rapidly, our analysis of Apple company data shows strong growth year over year," Munster says. "With less than 5% of music purchased online, this market will go through massive growth in the next several years."

But Forrester was less confident about the state of online music, saying that as the largest online seller, Apple's leveling off of sales was an indication that even at 99 cents a track, most consumers still aren't sold on the value of digital music. Also, iTunes' annual sales don't nearly make up for the drop in CD sales in the United States alone, which are down $2.5 billion. Still, Forrester noted iTunes is meant as a complement to the players, with the players making the bulk of the money in the digital music business.

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