The Slow Death of the iPod

Jupiter Research has come up with figures [BBC] suggesting that only 20% of the tracks found on an iPod will have been bought from iTunes. The conclusion: “Digital music purchasing has not yet fundamentally changed the way in which digital music customers buy music.”

Paul Thurrot reckons that for Apple things are the other way around to what was expected (where the iPod was the razor, iTunes was the blades they made their money off): Apple has to sell more hardware for its business to thrive. He also reckons that Apple has got to come up with something neat to keep the circus rolling: “As iPod moves from gotta-have-it fashion accessory to all-too-common electronics device, it will be interesting to see if Apple can keep the momentum going.”

There are plenty of folk heralding the doom of the iPod. The Observer last week: “Sales are declining at an unprecedented rate. Industry experts talk of a ‘backlash’ and of the iPod ‘wilting away before our eyes’. Most disastrously, Apple’s signature pocket device with white earphones may simply have become too common to be cool.” One of its main sources: Tomi Ahonen, author of Communities Dominate Brands. (Check out these two posts for more discussion of this.)

This kind of talk infuriates fans of the iPod, Apple and Jobs. A piece on Arstechnica’s Infinite Loop points out that given CDs have been around for 20 years, and iTunes for only three, the idea that there are more CD tracks on iPods than from the Apple store isn’t overly surprising. (The article and the comments below, however, convey some intriguing vitriol against iPod-doom merchants specifically, and technology journalists more generally.)

A lot of this, I suspect, is down to the differing experiences across the globe. U.S. cellphones have long been woeful, but online commerce cheap and highly efficient, so it’s not surprising the iPod/iTunes model would work well. Europe is a little trickier: great cellphones, but at least in the case of the UK, overpriced iTunes content is apparently driving users legally dubious music download sites like AllofMP3.com (which overtook Napster.com in traffic about a year ago, according to Alexa). Asia is a different kettle of fish: cheap, small, generic MP3 players are so ubiquitous here, as are cellphones, it’s a tough call. But most people are going to prefer one device to two, so as music on phones gets better and easier, expect to see music shift.

That said, Apple are now so much more visible in Asia because of the iPod and there’s no reason they can’t be a part of that although if the iPod becomes commoditized, it’s hard to imagine Apple keeping pace with the already commoditized cellphone. I guess the final point here is the shift from music as a product to a service: It makes a lot of sense to listen to music on your phone if your collection is somehow fed to you by your cellphone operator. Subscribe to songs and they are on your music phone when and where you need them, and the whole ripping/syncing thing is going to seem pretty antiquated. Think ringtones, a market 12 times the size of iTunes.