Yep, you read that right.
Says the overview of this report from Forrester Research:
Forrester’s recent analysis of more than 2,700 US iTunes debit and credit card transactions reveals that 3% of online households made an iTunes purchase in the past year. Apple’s iTunes proves that $0.99 micropayments for digital music can lead to substantial revenue; buyers spent an average of $35 at iTunes over the past year. With half of all transactions costing $3 or less, though, transaction fees threaten to make iTunes unprofitable. Since the introduction of the iTunes Music Store, Apple has been steadily selling just 20 iTunes tracks for each iPod sold, suggesting that even at $0.99, most consumers still aren’t sold on the value of digital music.
This means, of course, that most of what’s on everybody’s iPods is content copied over from CD’s or content downloaded illegally.
It also means that the “refresh rate” of an iPod is little to none.
In other words, the iPod in this context is your portable music collection and not likely to be the place to hear your latest favorites (i.e., “the hits”) unless you’re in that 3% of online households who keeps your iPod up-to-date with the music industry’s latest.
And that, my friends, is a strength of radio (as outlined in our NAB presentation).
Of course, Apple knows this full well – and you can look to a future evolution of the iPod to act more like a radio with a music collection attached…
…for a price.
And the price of new music on the radio?