Good point-me too.

By far I prefer CDs, I own it, it's in my hand and not at the mercy of a failed hard drive or DRM restrictions. Sure, some CDs have DRM restrictions as well, but they are so laughably cirumventable that words fail me. Unlike a CD which never has.

My son wants Decemberists and Flaming Lips albums for Christmas. I thought it would be nice to give him CDs to open on Christmas day but realized that I can save $10 by downloading them and burning them on to a disk that he can open on Christmas. The lower cost is definitely something that keeps me coming back to iTunes.

Who's analyzing my credit card? Or in this case, who isn't analyzing my credit card.

IS experiencing a quarterly down turn, what about the competition? Don't hear about any of them.....sigh. I would imagine Rhapsody and "the marketplace" aren't faring so well either.

The only reason people complain about DRM is the fact that they don't understand the "work-arounds". I'd MUCH rather have a cheap NON-SUBSCRIPTION, "one tune at a pop" service than have to go out and buy a whole CD for $18, from an artist I may end up hating in 3 months. I also don't want McHappy points in an account somewhere in cyberspace.

Enuff said from me.

You do realize that analyzing an indirect measure, such as credit card transactions, without access to the direct data is quite unreliable. Combine that with a conservative public company announcement (yes Apple is conservative wrt their public pronouncements) that indicated at minimum flat sale I would have great doubts about this 'pronouncement' by Forrester, a research firm I've known through direct knowledge to be way off in the past.

If its a certain band, or just plain good music throughout the CD, CD is definitely the way to go, however for those hard to find (or I'm just too lazy to shop online or at the store) I'll go straight to iTunes (its very convienient as you all know. Plus for the odd song here or there, who wants to buy the whole CD? I mean sure it has DRM, but then its unlikely anyone I know will want the same music.

Since iTunes started selling music the only CDs I've bought are ones that aren't on iTunes.

I love the convenience of it. If I buy a CD all I do is rip it to my computer and never look at the darn thing again. Might as well skip the ripping process!

I wonder what these declining revenues mean for its future, though, if anything.

That caught your eye too eh jasong? Somebody is watching. Bothers me a tad.

As for sales, if I think about the music that came out this year, I can't recall very many that I would really want. Last year had a much better selection of tunes from artists. We all listen to different stuff, but for anyone to keep revenue flow in the music industry, good music needs to keep coming out. I'd rate the album quality this year about average if not slightly less than average. I agree that quality should be better on the ITMS, but I don't think that will help deal with a 65 percent drop.

The publicity about lawsuits against people stealing music has also died down. Perhaps after time without feeling that threat, people have returned to downloading for free. I don't agree with the lawsuits, but I think it deterred some folks and angered others.

ITMS quality = bitrate from 128 to 192

1. 99c tracks. Love it. Spending a buck on a song is a no-brainer, spending $16 for a CD is much less of an impulse buy for me. 2. $9.99 for most albums. Save me a couple bucks over Amazon or Target and I'm happy. 3. Instant gratification. Hear a new song on a commercial or whatnot, download it from iMS a few minutes later.

I agree with beechlady and icecrystal. Apple has done this right.

As to the fellow who recommends off-site storage of purchased tracks: get a live. If my house burns down, the last thing I'm going to be worried about is how many songs I lost.

Expensive DRM-infected music is a small niche. There are obviously quite a few people (like Malax above) who make good use of it, and without a doubt Apple's store is the best of the bunch.

But really, it's a pain. $1 per song is too much for most people I talk to, the available formats are too limiting, and DRM is unacceptable. We're now at the place where the novelty has worn off; a lot of the business at iTMS was probably people trying it out, buying a few tracks to see what it was like. However, enough people have been bitten by DRM or other issues to know to stay away from it now.

Interestingly, a few stores like Yahoo seem to be experimenting with DRM-free music; and of course, some of the overseas stores only do DRM-free music. There must be *someone* in the industry smart enough to realize that DRM drives away customers without doing a single thing to stop music sharing.

Ultimately, the only business model likely to succeed is one that serves customers. I've bought a lot of music, but none of it from iTMS, and none of it infected with DRM, trojans, or rootkits. That's not my bag.

I wonder how accurate their "analysis" of credit card transactions is with regards to iTMS. The iTunes gift cards are in every store in the world and sometimes discounted (Costco had the $50 for a few pennies less than $45). I wonder how much of the purchasing has shifted from credit card to iTunes Gift Cards... That would not show up on Forresters screen.

Like some others here I question the data. Let's wait and see what Apple reports in January. At least up until now the download/sales trends at the iT(M)S has been accelerating since day 1--that is sales increasing at an increasing rate. It would be news if the growth rate slowed. This report goes two steps beyond that to say that sales have actually declined. That's hard to believe with millions of new iPod owners ever quarter.

I'm sure that there are millions of people like myself who were reintroduced to their own music collections thanks to iTunes+iPod and and then started spending money on music again. I just don't see how things would have changed in the past year.

Forrester is just spreading FUD so the stock drops a little and they can buy in cause they know apple is about to take over the world...

i also think the Gift Cards are the major shift this year, its much nicer to give a physical iTunes album this christmas than a direct download and we can buy it in a retail store.

I'm not a big buyer but i normally buy about 1 song per month and ended op buying 35 this month, its the instant gratification that does it and not having to rip the CD that I'll never use again. Backing up the music is indeed a worry but who backs up all there CD's offsite?

My library has aboout 14'000 Tracks, mostly ripped from my cd-collection. I bought about 300 Tracks online. My collection ist complete enough… I wouldn't know what to buy anymore, and I'm shure, this happens to many others. On the other hand, there isn't much indie-music on itunes. So the songs I bought from itunes are mostly songs I never dare to buy a whole cd (all saints, robbie williams ant the likes)

My library has aboout 14'000 Tracks, mostly ripped from my cd-collection. I bought about 300 Tracks online. My collection ist complete enough… I wouldn't know what to buy anymore, and I'm shure, this happens to many others. On the other hand, there isn't much indie-music on itunes. So the songs I bought from itunes are mostly songs I never dare to buy a whole cd (all saints, robbie williams ant the likes)

...subscription music is even worse. i went from a flurry of buying on iTunes, then reluctantly receiving gifted songs, to gong back to buying CDs.

until downloadable mucis is of archive quality... FVCK IT!

the latest iTunes interface is great. downloading 1-time-watchable TV episodes is great. but i will never buy another song/album at 128k bit rate. and i thik the tide is rising.

Personally, I can't tell the difference between tracks straight from the CD and ones I've ripped at 128k AAC. Then again, I only listen to my music through my iMac (JBL Creature speakers) and various iPods. I suppose it's possible that if I tried a pair of high-end headphones and did a head-to-head comparison I'd notice some differences, but for my purposes the iTS tracks are perfect substitutes for CD tracks.

Having said that, if I were given the option of being handed a CD for $9.99 or downloading the tracks for the same price, I'd choose the former. But I would likely never listen to the CD itself. It's just nice to get a free backup.

Interesting that Forrester claims iTunes sales are falling because credit card revenues are down. What about iTunes gift voucher sales. They are being marketed quite aggressively in the UK via the big supermarket chains and I suspect that sales via vouchers has increased dramatically. Maybe the same can be said for sales in the USA.

I purchases enough iTunes cards via ebay to purchase about 200 Jpop tunes from the iTunes Japan store when I had an iPod.

Fast forward two years and the iPod is dead and I have both a Sony A1200 and a Cowon A2. Neither can play the iTunes DRM-laced songs without me jumping through hoops. If I want I can buy/burn/rip the song (which Apple recommends) back to iTunes. Why can't Apple just provide a conversion algorithm in iTunes for direct conversion?

As it is, I have gone back to making larger purchaes less often of CDs from Japan. This way I have the CD, I can choose the compression scheme I want and there is no DRM nonsense.

If Apple would open up their music to any player and allow true PCM downloads, then I would continue to buy from them, but it just isn't worth it to be forced into buying their DAP.

Apple has sadly lost a customer.

Have you noticed that the guy who miss quoted the data, has recanted. Probably made money shorting stock. It only takes one big payday. The SES should investigate. Fur should fly this morning in market.

Like some others here I question the data. Let's wait and see what Apple reports in January. At least up until now the download/sales trends at the iT(M)S has been accelerating since day 1--that is sales increasing at an increasing rate. It would be news if the growth rate slowed. This report goes two steps beyond that to say that sales have actually declined. That's hard to believe with millions of new iPod owners ever quarter.

Well, some would argue that only a small percentage of iPod owners use the iTMS (and vice versa). And if you read the quote, apple doesn't disclose their revenue for the iTMS (last quarter, it was 'above break-even' which means nothing).

That said, I've been buying less and less. I wish iTunes would set up a wishlist, I'd probbaly buy more.

You can set up a wishlist in iTunes.

1. Create new playlist. 2. Go to iTMS. 3. Find songs you like, drag to playlist.

That's it.

As for the music store facing a downturn, that's not surprising. I haven't bought music from there for almost a year (I've got too much music I don't get to listen to as it is). And after some point, esp. with a new service like iTMS, once you've filled in the blanks with the singles and few albums you want, you're not necessarily just going to keep on buying, buying, buying. Esp. since most new artists just blow.

Oh, and they don't have Radiohead! How can they be taken seriously with Radiohead! And no Beatles as well! That's what's holding them back!

Or maybe its the restrictive pricing! If only they could charge 2-3 dollars for some popular music, and possibly less than a dollar for older c***, they'd sell more like the labels say! That's it, its all Apple's fault for forcing us into this 99 cent h***-hole!

Or its the P2P'ers. When the RIAA finally shuts off all online piracy (should be early next year, I think), then sales will take off!

$10.00 per downloaded album? go to waterloomusic.info and click on digital store button to see how we here can get an album in whatever bitrate we want for $5.00 per album.

that Micro$oft has their hands in Forrester's pocket, to give them an exxtra 'nudge' to spread doom and gloom about apple's music service just in time for Christmas? The timing on this "announcement" is more than just coincidence. Who here doesn't believe that Microsoft isn't above liming the "experts'" pockets to help boost Zune sales during the critical Holiday sales period?

You're all missing the fact that this story is complete bullshnitt. These guys don't know what the h*** they're talking about.

I've been buying all my ITMS stuff in the last year through PayPal that receives money straight from by bank account. I haven't used a credit card in over four years for any purchases. Plus the gift cards are all the rage. I remember THEM saying the same thing last year and in January ITMS shoots through the roof after the gift openings. Nothing new here.

Another FUD man trying to create negative news for Apple. If this were true iPod sales wouldn't be going through the roof.

is most likely the consequences of the DRM, and the tightening of the DRM over time by the record companies (i.e., their greed). Apple showed them that pay for download would work, but now they want to let it make them more money, rather then pass the cost savings on to the consumer--and the consumer is saying, we're not stupid, we'll just go back to CDs or better yet, downloading illegally for free. It just goes to show you, corrupt cultures can't be reformed, they have to be brought down. Apple needs to move aggressively into the music publishing business, letting independents post and recover, they should buy a small label and then offer to represent larger groups if they want to jump to a more traditional arrangement, etc. s**** Hollywood, they have produced quality anything in years anyway.

...Hollywood, they have NOT produced quality anything...

(why can't you edit your own posts on this system???)

I liken DRM as the analogy of an ankle bracelet for an innocent person.

A CD has no limitations, I can burn, rip, etc. without worrying about anything.

DRM is detrimental to the legitimate user. Just look. What effect has DRM had on piracy? None. DRM punishes the legitimate user.

Gooser, Waterloo music is only workable if you happen to live near the store in Virginia. To get a CD for $5.00 requires you purchasing the CD for somewhere between $10 and $15; ripping the CD to your hard drive at home; return CD to Waterloo store for a $9.00 credit towards your next purchase only. Hardly what I would call an acceptable ITMS alternative.

i'm sorry, never meant that it was an alternative for everyone. however it is definately an alternative for those who live here. check your local market, you may have alternatives you don't even realize.

I think it's sad when people say ONE dollar is too much for ONE song. But I think there is a reason behind it. I think it's the same fact that vinyl and cd albums eventually fell prey to... THAT DEEP DOWN PEOPLE NO LONGER BELIEVE THE MUSIC (the art of it) IS EVEN WORTH A BUCK.

I think we watch the American Idols and others parade around; then we hear the guy in the subway with enough soul to sing one note that would put an entire Billboard #1 album to shame; and deep down it hits us! What have I been paying for?? Why am I giving any amount of money to Universal for c***, when this guy in the subway is offering me his golden voice for just a quarter?

I don't care if it's 9million bitrate - it wont make Paris Hilton or the majority of mainstream music out there sound any better. Eventually people get tired of tired music; sick of sick music; and start to treat bad music badly. So I guess it shouldn't be a surprise that people find no fault with carelessly downloading and copying music for free.

But even in the case of good music - why the desire to copy music so rampantly people? Why all the cry-babies about DRM? Buy all the real cds you want - you still need to rely on computer software or technology to play it or copy it. You don't like a company's DRM rules - but you love that same software to import and copy a store-bought cd as many times as you want? That's just plain greedy and ungrateful!

And read the fine print on your cds - we're not supposed to be duplicating store-bought cds. As we type, record labels are fine-tuning ways to make cds just like dvds. To block you from burning copies of store-bought cds. They've already done it with various albums.

We have become a greedy and ungrateful society - and true, the record companies aren't giving us any reason to change. But I fully appreciate Apple's efforts to get us all to Think Differently. But that's just my song.

128kbps from iTMS is not the same as 128kbps from a CD. iTMSs songs are created from the master tracks which are much higher resolution than a CD. Even though the bitrate is the same, the iTMS track often sounds superior.

I knew there would be a drop in sales after the store was established - I anticipated about a 50% drop a year or two out, but 65% is a bit more than I expected. The initial rush of "gee, this is new and cool!" buyers came and went, and now it's the regular / casual buyers that are left.

that Micro$oft has their hands in Forrester's pocket, to give them an exxtra 'nudge' to spread doom and gloom about apple's music service just in time for Christmas? The timing on this "announcement" is more than just coincidence. Who here doesn't believe that Microsoft isn't above liming the "experts'" pockets to help boost Zune sales during the critical Holiday sales period?

In what fantasy world do you live in where you think people who use (or might use) the iTMS would actually say "Hey, I was going to buy an iPod and then some music from Apple's store, but their sales have dropped, so I'm going to buy an MS Zube instead! Because even though their sales numbers are really small, it seems like the thing to do!" (hey, if they know the sales figures of the iTMS, they're going to know them on the Zune).

I can't recommend eMusic enough. High-bitrate, DRM-free, iPod-compatible MP3 files. Different model than iTunes in that you pay a monthly fee (starting with 30 downloads per month for $9.99 per month), but songs are basically $.33 per track. Great selection of indie music.

If you like to download a lot of music and don't necessarily need the latest top 40 stuff it's a pretty good deal.

i'm sorry, never meant that it was an alternative for everyone. however it is definately an alternative for those who live here. check your local market, you may have alternatives you don't even realize.

Damn, why even bother spending anything. You might as well just go on-line and download all the music. Its free and you have the same right to do that as you do with what you're doing here. h***, or go to AllofMP3.com and pay near nothing for your music.

Maybe it's because Apple hasn't added any major stores in other countries for a while??

I think part of the iTunes revenue was from initiating stores. People buy a lot when the store is first introduced in their country and then after a while, sales level off. I think now iTunes will be seeing a steady increase year-over-year. Especially with iTV and more movies coming out in the near future.

Look at the source of the article. There is no link to the original research paper. The guy at The Register has a beef about DRM, he is unlikely to write a balanced article on this subject. The bits that he does quote say that there is no direct information that its all taken from credit card payment information.

bitrate does matter. no one is saying that 128 from iTMS is worse than encoding your own CDs at 128. but those of us who care about quality *don't* encode our CDs at 128. duh.

128 is not archival quality, in any codec. the difference is audible when listening on anything other than computer speakers. the highs fall off, the lows get looser and noise is introduced, in all lossy compression scenarios.

if i'm going to invest in a library of music, over a period of years, it has to be archival quality. and i would be willing to pay a premium for that quality. could be a very profitable venture for aple if they introduce "audiophile downloads".

iTMS is great for buying a song or two on impulse, to check out a new artist or whatever. or for TV shows, etc. but not for albums you plan on keeping forever.

What does this really mean? Last time I checked the whole music industry was down 65%!

CDs are safe? They weren't at one point in recent history, and given time this will come back but in a "it won't fry the drive" method. Reference: http://news.com.com/2100-1023-912695.html

iTunes itself has a great business model: families, teenagers, and the 37+ age range. How? why? Well, thanks to the Disney-Jobs partnership, most if not all things Disney are on iTunes. That's a selling point to moms and dads, teenagers can get the single hit song from Mrs er Miss Spears for $1 (vs $18 to $24 for the whole disc retail), and my mother at 44, hasn't bought a CD in two years because of iTunes. She does not have an iPod, she just makes CDs to listen to in her car. She's never hit the iTunes CD burning limit, and all is well. Seems their model is working, and every single company at some point in time (look at MS right now) sees a lull in sales. That's the nature of commerce, plus this war we're in isn't really a motivator for Americans to spend excess money. That may be why iTunes has the allowance feature for teens!

Over half the cars made today have a line-in to their stereo for basic MP3 support. Many cars have iPod integration kits. It's simply a matter of time before Honda's minivan can play iTunes audio up front for mom and dad while playing the latest Disney film to the built-in head rest LCD monitors for the kids in the back.

Apple has referred to the iPod's size (3G) as "small than a cassette tape" and Ives even said it was "a cigarette pack for a music addict" all referring to it's size and storage capacity. The iPod has become a platform for accessories and a medium to which the CD, like the tape and vinyl, can be replaced with.

Do I use iTunes? Only if I get a gift card. Do I burn/rerip my purchases? Yes.. I have a TiVo and I'd like to have my music be shared to it. Do I have problems with this? No. I cannot say the same for iTunes movies, but I'm hoping iTV offers some kind of solution to that quandary.

whooo-- and in other news, Forrester Reasearch, is also lagging far behind Apple Computer in the sales of millions/billions of music dollars.

OK -- maybe this is one idea:

* Do they track iTunes gift-card purchases? Indirectly, this accounts for tons of business; they're everywhere . . .

* Oh, speaking of which . . . Really, I mean, how many people actually use the Gift-cards right away? We seriously had our $25 card stashed in the drawer for, like, 5 months . . . now multiply this times a few-million of those babies sitting in people's c*** drawers out there going unused.

Ok, now Apple has official come out and said that Forester's numbers are "simply incorrect" as most of us suspected.

I'm quite sure that Steve's keynote in January will include a slide showing a continued growth in sales. Apple celebrates milestones (e.g., billionth song sold) so sooner or later we'll get some valid numbers.

But in any case, to be "successful" the iTS doesn't need to sell a zillion songs. It's there, in part, to make the iPod experience that much better. It's pretty impressive that any non-computer-geek can go from "gee I like that song" to finding and buying and playing the song in iTunes and on their iPod in a couple of minutes with maybe a dozen clicks. My mom, who hates computers, could do that. And I, who uses computers 10+ hours a day, appreciate the incredible convenience of the iTunes/iPod model.

As to the 128k bruhaha, I just don't buy it. I bet the true increased perceived value of going from 128k to 192k would be maybe 1%. That is 1% of people would notice. By perceived in this case I mean people hearing a difference, not "gee it's better because 192 is bigger than 128." It would be like swapping out a speedometer that only goes up to 85 with one that goes to 120.

Oh well we can agree to disagree on this. I suppose it's possible that these boards are populated with exactly the 1% of folks who would notice. So to you I say, "yes YOU would notice because you're very, very special."

I've been buying most of my music from eMusic instead of iTunes, since they sell DRM-free MP3 files, which I can play on my PSP, GP2X, and LG Phone as well as my iPod. Unfortunately their selection isn't great, so I still buy from iTunes when something I want isn't available in eMusic.