Purchases from iTunes take a dive

Music store could be heading into the red, says report

LONDON — Apple’s iTunes music store is in danger of becoming unprofitable unless it can persuade people to buy more music, according to a report by technology experts Forrester Research.

Forrester analyzed more than 2,700 iTunes credit and debit card transactions in the U.S. to compile the report, which claims that the number of monthly purchases fell 58% in the first half of 2006.

Apple itself does not break out revenues from iTunes, despite running the operation as a separate business, but the Forrester report states that the company sells “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.”

Written by Forrester’s Josh Bernoff, the report also follows iTunes’ growth from April 2004 to January 2006, before the downturn in business in the first half of this year. Bernoff admits that his comments are based on “a relatively small group of people,” but concludes “digital music is a tough market, even for the clear leader.”