Thursday, February 23, 2006

iTunes: 1 Billion Served

The RED HERRING reports that Apple’s iTunes has sold 1 billion downloads since it opened less than three years ago. According to the article the customer purchasing the 1 billionth song won "an iMac computer, 10 iPods, and $10,000 worth of downloads.

Susan Kevorkian at IDC said, "Looking at the success of iTunes, you can’t look at it in isolation. It corresponds so closely to Apple’s success in the portable device market."

According to the article, "sales of digital music in 2005 jumped 190 percent to $1.1 billion—6 percent of all music sold worldwide," and Apple claims to have 83 percent of the market.

While songs sell for $0.99, some figure Apple is earning only pennies a song. John Barrett at Parks Associates said, "Apple’s revenue model is unique… they’re not selling music as much as iPods. That’s the genius behind Apple’s model. Everyone else is trying to make money off the music, while Apple is making money off the hardware."

Kevorkian added, "With each passing year since [iTunes] was introduced, Apple has continued to expand its lead both on the hardware side and the service side. It’s certainly become more difficult for its competitors."