Jobs: Apple will not meet 100m song download goal
Poor results from the Pepsi promotion
Analysis Apple has admitted that it will fall rather short of its first-year iTunes Music Store 100 million song sales target.
"We're not going to make that number," CEO Steve Jobs told The Wall Street Journal this week. "At the rate we're at right now we'll probably have sold 70-75 million songs by the end of April."
The forecast was made by Jobs himself last October, and the admission comes after the company said on Monday that it had sold 50 million songs since its iTunes Music Store was launched on 28 April 2003. "We think we've got a really good shot at selling 100 million legal downloads the first year... by April 28th, 2004," said Jobs (our italics).
Apple's 50 million download tally was seen by some web sites as inherent admission of failure. Of course, Apple might be able to double that figure in a month and a half, but it seems unlikely.
While the 50 million figure does not include the tracks given away through the Pepsi-Apple joint promotion, it's clear from Jobs' speech that he hoped the giveaway would encourage folks claiming their free song to download some more and pay for the privilege. He also banked on the company's partnership with AOL helping ramp up the number of paid-for downloads to 100 million.
It's interesting that a number of well-known news sites were harangued by Mac fans for initially stating that Apple would miss its 100 million. Indeed, both Cnet and BBC News both modified their headlines apparently after being flamed by the Mac community for their apparent error.
In fact, Jobs never said that the Pepsi downloads would directly provide the 100 million target, rather that it would help. As the quote above shows, Jobs refers to "selling" 100 million songs, not 'selling and giving away' that total. In other words, Pepsi redemptions do not count toward the 100 million goal.
That's not to say the total wouldn't have been achieved hadn't the Pepsi programme gone as planned. Jobs told the WSJ that Pepsi redemptions weren't "what we thought they might be", and claimed that "many of the Pepsi bottles with the winning bottle caps were distributed late".
Pepsi sources cited by The Mac Observer web site suggest Jobs might have a point. However, it does seem likely that Apple over-estimated how many paid-for downloads the giveaways would lead to. Ditto how many AOL subscribers would use the service.
All of which shows the danger of making big numerical projections well ahead of the deadline. In mitigation, Jobs can claim that the early success of ITMS was way beyond what the company had anticipated, so an ebullient forecast at the time the service was opened up to Windows users can perhaps be forgiven.
And even 70 million tunes yields an annual revenue contribution of $23.1m, based on Apple's claim that it takes 33c out of every 99c track sale. What its profit margins are remain to be seen, but at the very least Apple has set a large lead that its rivals are a very long way yet from matching. ®