• iPod sales drop to lowest quarterly number since 2006•
Sunday 29 August 2010
The slump in sales of Apple’s device is a concern for music industry which looked to the iPod to boost download sales.
The latest sales figures for the quarter to June showed 9m sold – the lowest quarterly number since 2006. In short, the iPod, launched in October 2001, looks to be in terminal decline. While Apple is unworried – sales of its iPhone and iPad are booming – the dropping figures for the digital music player market are a concern for another sector: the music companies.
The music industry had looked to the iPod to drive people to buy music in download form, whether from Apple's iTunes music store, eMusic, Napster or from newer competitors such as Amazon. The problem for them is that digital music sales are only growing as fast as those of Apple's devices – and as the stand-alone digital music player starts to die off, people are likely to lose interest in buying songs from digital stores.
At the International Federation of the Phonographic Industry (IFPI) , which represents the worldwide music industry, a spokesman agrees that the growth of digital sales has slowed. Figures for 2009 released earlier this year show that while CD sales fell by 12.7%, losing $1.6bn (£1bn) in value, digital downloads only grew by 9.2%, gaining less than $400m in value. "The digital download market is still growing," said Alex Jacob, a spokesman for the organisation. "But the percentage is less than a few years ago."
But as iPod sales slow, digital music sales, which have been closed linked to the device, are bound to slow too. The iPod has been the key driver: the IFPI's figures show no appreciable digital download sales until 2004, the year Apple launched its iTunes music store internationally (it launched it in the US in April 2003). Since then, international digital music sales have increased, exactly in line with the total sales of iPods and iPhones.
Now, though, Apple has much more profitable fish to fry, in the form of TV shows and films, apps and ebook sales to its iPhone and iPad (and the iPod Touch, effectively an iPhone without the phone function). It gets 30% of the sale price on apps and ebooks, roughly the same as it does on music download sales, but those sales are expanding exponentially, while music downloads are not. In June Steve Jobs said there had been 5bn app downloads in just two years (and Apple earned about $410m from its 30% cut of sales). That compares with 10bn songs downloaded from the iTunes music store in seven years.
And as Mulligan notes, for a world of apps, a plain piece of music seems a bit limited. "You can download a song from iTunes to your iPhone or iPad, but at the moment music in that form doesn't play to the strengths of the device. Just playing a track isn't enough."
Yet there are still rays of hope. If Apple – and every other mobile phone maker – are moving to an app-based economy, where you pay to download games or timetables, why shouldn't recording artists do the same?
They are. Those in the forefront include the British singer Peter Gabriel, whose Full Moon Club app is updated every month with a new song. "Nine Inch Nails has been in the lead for a long time in terms of an app for delivering unique content, but they're isolated cases," says Mulligan.
Even so, the IFPI and BPI think the app model shows promise – as much as anything because it might be an effective way to reduce online piracy, still the main problem of the industry. Apps tend to be tied to a particular handset or buyer, making them more difficult to pirate than a CD.
It may be premature to predict the death of the iPod yet – but it's unlikely that even Steve Jobs will be able to produce anything that will revive it. And that means that little more than five years after the music industry thought it had found a saviour in the little device, it is having to look around again for a new way to grow – if, that is, one exists.