If I told you that only 3% of online households in the United States have bought music from iTunes in the past year would you believe me? Forrester Research issued a report last week declaring that the 3% of households that have purchased music from iTunes store spent a total of $35 for the year, and half of them spent only $3 or less at a single time. Analyst Josh Bernoff chalks this up to, "even at 99 cents, most consumers still aren't sold on the value of digital music."
So where do the roughly 20% of people who own iPods get their music from? My best guess is through the illegal peer-to-peer networks, which continue to give the music industry its biggest challenge to greater profitability.
This is evident in the deal Universal Music Group CEO Doug Morris struck with Microsoft Corp.'s (NASDAQ:MSFT) Zune wherein Universal receives $1 royalty fee for every Zune device sold by Microsoft. Mr. Morris hinted that he'll seek a similar rate from the iPod when it comes time to renegotiate UMG's iTunes licensing agreement this year.
Apple Computer Inc. (NASDAQ:AAPL) simply needs to find a better way to induce the remaining iPod owners to visit the iTunes Store. Maybe a new pricing scheme, freebie promotions, frequent buyer club with points?
Before the bell: Stocks ready to climb on hopes of continued low rates
Why do we have a weak dollar?
Holiday hiring slow for retailers
