Dive into OS X

Apple is close to announcing it has signed a deal to sell HBO programs and movies on the iTunes website, according to HBO employees involved in executing the agreement.

HBO will begin selling some of its most popular television series on Apple’s iTunes Store, the companies announced on Tuesday.

HBO will offer The Sopranos, Sex and the City, Deadwood and Rome, as well as Flight of the Conchords and The Wire.

The deal marks the first time that Apple has agreed to a separate price structure for a content provider, one of the employees said. NBC pulled its programming from iTunes last summer after Apple refused to charge more than $1.99 for that network’s shows. In May, NBC struck a deal with Microsoft to sell its shows on the Zune website.

From mow on, NBC is the only major channel currently not offering its shows through iTunes. The store currently carries 800 different shows and has sold more than 150 million episodes.
The iTunes store isn’t a big cash cow for Apple, making up less than 10% of Apple’s $24 billion in sales last year, but is a big driver of iPod and Macintosh computer sales.

Apple announced Tuesday that more than three billion songs have been purchased and downloaded from the iTunes Store. The store has a catalog of over 5 million songs, 550 television shows and 550 movies.

The most significant thing about this is the growth curve and especially the pace at which Apple reached its latest billion-song threshold. It took the company a little less than three years to sell the first billion iTunes downloads. Then it took less than a year (11 months) to sell the second billion. Now, just over six months later, the store has passed the three-billion song mark.

Looking at it as precisely as possible, if we assume that the two and three billion song targets were hit the same day as the press releases went out (January 9, 2007, and July 31, 2007, respectively), that means it took 203 days to sell one billion songs. That means the Store had to average about 4,926,108 song purchases per day, or 205,255 per hour. Breaking it down even further, that’s 3,421 songs sold per minute, or an astounding 57 songs sold every second for those 203 days!

Regardless of the portion of the market that’s an extra 3 billion dollars revenue on the balance sheet (1 song = about $1.00). I believe Apple makes between 10 and 20 cents per song profit… So that’s 300 to 600 million dollars in profit. Thanks iTunes Store!

Apple Inc.’s digital music store iTunes is now the third-largest music retailer in the United States with 9.8 per cent market share in the first quarter, ranking behind market leader Wal-Mart Stores Inc.’s with a 15.8 percent share and Best Buy’s with a 13.8 percent share, according to The NPD Group. Apple has overtaken online retailer Amazon.com, which share was 6.7 percent in the first quarter, slightly ahead of the target of 6.6 per cent.

The NPD Group report also highlights the growing strength of digital music in the U.S. market as physical sales of compact discs continue to slide.
Both, Wal-Mart Stores and Best Buy’s, mostly sell music in the CD format. Online store bestbuy.com has a 1.1 percent market share with sales of both CDs and digital music. Amazon also sells music mainly in the CD format, but last month it started selling digital music but without copy protection software such as that used by iTunes.

NPD said the iTunes digital music store had benefited from sales of Apple’s iPod digital music player during the holiday season. The vast majority of digital songs and albums bought on iTunes will only play on iPods, as well as the iTunes PC application.

iTunes last month rolled out a new service called iTunes Plus which sells higher quality digital songs without copy protection at a premium price.

Apple’s rise in the NPD survey reflects a key shift in the music industry: compact disc sales are declining while digital music sales are climbing. That, plus the popularity of Apple’s iPod portable music players, has helped boost iTunes sales.

Still, digital music represented less than a quarter of total music units sold during the quarter, NPD said.

This nearly empty iPod Amnesty Bin was photographed by Rex Sorgatz and posted on Flikr here.

It seems rather depressing for Microsoft. I presume they’d pick a bin comparable in size to their target audience, so it looks to me like fewer than 1% of the Zune team has switched to Zune. It may not be as bad as it looks, though. It could be that the team is relatively small, and this bin is for all of the iPods upgraded nationwide.

Apple just posted an article written by Steve Jobs, describing the DRM situation with iTunes, as he sees it. You can check it out at: www.apple.com

John Gruber wrote a very good review about this article on his site daringfireball.net