: Q3 2005 Conference Call - iTunes Market Share confusion


jasonwood
Jul 14th, 2005, 01:16 AM
I'm confused... in the conference call Peter said Apple's share of legally purchased and downloaded music in the US is above 80%.

Now it would seem to me that "purchased and downloaded" excludes any songs that were downloaded under the subscription model, because they are not "purchased".

Later in the call (about 47 minute in), peter uses that 80% figure as support for his comment, "we just don't think very many customers are interested in renting their music".

I can't make out where he said the 80% figure is coming from... anybody know? I'd like to find out what that number means.

Derrick
Jul 14th, 2005, 01:42 AM
According to notes from the conference call listed on MacDailyNews:

"iTunes Music Store has increased over 80% of legal online downloads according to Nielsen/SoundScan"

Here is their summary:

http://macdailynews.com/index.php/weblog/comments/6263/

mac_geek
Jul 14th, 2005, 06:23 AM
I can't make out where he said the 80% figure is coming from... anybody know? I'd like to find out what that number means.

Some companies report market share based on units (e.g. songs downloaded) and some report based on dollars (e.g. revenue from songs downloaded). Soundscan would report both. Given that Apple really didn't specify, and given that people with subscriptions are probably filling their harddrives in the first month, I would guess he was quoting dollars, which whould tilt the reporting in Apple's favour given their business model.

iKV
Jul 14th, 2005, 07:25 AM
My educated guess is that the 80% refers to revenue, not downloads. Same as mac_geek's opinion.

The average iTunes customer only purchases several songs (previously article I read, can't remember source), whereas the average subscription-based customer most likely downloads hundreds of songs to make the most of their investment. However, downloading more songs doesn't increase revenue for the Napsters of this world.

So, if this is the case, you can toss Peter's "we just don't think very many customers are interested in renting their music" comment into the false advertising claim can. :)

********

Quick question on the subscription model: it's described by Apple and others as a way to "rent", not "purchase", music. Does this mean that subscribers must, theoretically, forfeit or delete their music once they end their subscription?? Or is this just further spin created by Apple to discredit the subscription model???

mac_geek
Jul 14th, 2005, 07:35 AM
Quick question on the subscription model: it's described by Apple and others as a way to "rent", not "purchase", music. Does this mean that subscribers must, theoretically, forfeit or delete their music once they end their subscription?? Or is this just further spin created by Apple to discredit the subscription model???

KV, my understanding with the subscription services is that once your subscription runs out, the music becomes nonplayable.. I think they're using Digital Rights Management to achieve this..

iKV
Jul 14th, 2005, 08:13 AM
KV, my understanding with the subscription services is that once your subscription runs out, the music becomes nonplayable.. I think they're using Digital Rights Management to achieve this..Interesting, so digital music subscribers really are renting their music.....

Oh, how about users who transfer their music on to another computer that doesn't have Internet capabilities. In this case, there's no way for the songs to confirm whether or not the "renter" is still subscribed. Unless, of course, the songs become nonplayable on a computer that cannot interface with the net. Interesting. Anyways, this has piqued my curiousity, currently searching to find out more about this! :)

teeterboy3
Jul 14th, 2005, 08:45 AM
I can't make out where he said the 80% figure is coming from... anybody know? I'd like to find out what that number means.
I believe you have uncovered something called "marketing".

jasonwood
Jul 14th, 2005, 10:27 AM
Interesting, so digital music subscribers really are renting their music.....

A few more interesting details based on my understanding of the DRM they're using for the subscription services...

You can't burn "rented" music to a CD unless you buy it.

You have to plug your MP3 player into the computer frequently - to prove that you're maintaining your subscription.

You can't use the music in other ways, such as in a home movie.