Report: iTunes Music Sales Fall 5 Percent Amid General Decline in Demand

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Remember the heady days of music sales, when Apple beat the stuffing out of traditional music labels, even besting retail giant Wal-Mart as the No. 1 seller of music? Well, the Cupertino, Calif. company still leads, but the growth of music is slowing and appears to be giving way to video.

Revenue from digital music sales for the last three months of 2010 were up just 1.6 percent for Apple, falling 5 percent from the previous quarter, according to a Tuesday report. Although Apple’s digital music sales are slowing, Warner Music Group appears even further along the S-Curve; the publisher’s last quarter sales fell 14 percent, the company announced. For Apple, the next thing is digital video, where one research firm says the tech giant controls almost 65 percent of the sales.

Apple iTunes accounted for 64.5 percent of all 2010 revenue from electronic sell-through and Internet video on demand (IVOD), keeping at bay retail heavyweights such as Microsoft, Amazon, Sony and Wal-Mart. The introduction of the iPad and the upgraded Apple TV helped the Cupertino, Calif. company maintain its lead, according to market researcher iSuppli.

“We expect that in the United States, Apple’s strong performance in IVOD will allow it to continue to bypass the video-on-demand services offered by many major cable operators,” the researcher announced.

Microsoft’s Kinect 3D motion sensor system for the Xbox 360 helped strengthen its No. 2 position, accounting for 17.9 percent of U.S. electronic sell through and IVOD consumer spending. That’s up from 11.6 percent in 2009. Sony held the No. 3 ranking last year with 7.2 percent, according to iSuppli.

[All Things Digital, CNET]