Peter Kafka

Recent Posts by Peter Kafka

iTunes Sales Are Huge! But Growth May Be Slowing.

Apple sold $2.4 billion worth of apps, music, movies and books via its iTunes store last quarter. That’s almost twice what the company was doing two years ago. And no matter how you look at it, it means Apple is a giant force in digital media retail.

That said, it looks like iTunes’ sales growth may be slowing down.

Last quarter, iTunes sales increased 28 percent; in the previous quarter they increased 23 percent. Most retailers would be very happy to see those kind of leaps, but as far as I can tell, they are the smallest increases Apple has seen in the last two years.*

You can see what the last two quarters looked like in context, below:

iTunes sales growth All Things Digital

So what does that mean? Dunno. Maybe nothing more than a statistical blip.

If I had to bet, though, I’d put money on a couple different culprits:

  • In the old days, when Apple only sold music, iTunes sales rose alongside iPod sales: Whenever someone bought a new gadget, they spent some money on songs, too. Assume the same is happening here, but for all digital media. And booming iPad sales aren’t enough to overcome more modest iPhone sales.
  • The other thing that fuels iTunes sales is the expansion of new markets — new iTunes stores and iTunes App Stores opening up in new countries. And maybe those lines shoot right up again if or when Apple shows up in China. We’ll see.

* All the data in this chart either comes directly from Apple, via the prepared statements CFO Peter Oppenheimer reads during quarterly earnings calls, or via math I’ve done myself, based on those same numbers. The chart only goes back two years because Apple didn’t consistently provide iTunes sales numbers before then.

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There’s a lot of attention and PR around Marissa, but their product lineup just kind of blows.

— Om Malik on Bloomberg TV, talking about Yahoo, the September issue of Vogue Magazine, and our overdependence on Google