iTunes Hits 50 Million in Europe, But is That a Success?

Apple’s European iTunes Music Stores have reached the 50 million tracks mark. The number is impressive in relation to the European market and there is no doubt that Apple have kick started the European Digital music market. However, when you compare the numbers to the global numbers (which are primarily US) Europe doesn’t look quite so strong.

When the UK, France and Germany ITMS were launched in June 2004 800,000 tracks were sold within 1 week, which gives a monthly download rate of approx 3.4 million. However the average monthly European download rate is now only in the region of 5 million, giving a growth of approx 45 percent, despite launches of stores in numerous additional European markets. This compares to a growth of approx 250 percent in monthly downloads globally over the same period (though the growth appears to have slowed over recent months).

So why are us Euros such laggards? The UK is large part of the EU total and the higher prices in the UK could well be an inhibitor to ITMS sales despite a large iPod installed base. Digital downloads are by definition an inferior product to CDs (no artwork, case etc etc) but current pricing doesn’t leave a lot of price incentive for buying a download album over a CD album. Apple are running right at the edge of what they can do margins-wise on current license fee structures. So if UK downloads are going to become more competitively priced it will depend up labels reducing their license fees.