• The Register, Wednesday, December 13, 2006 11:04 AM

Revenue from Apple Computer's iTunes Music Store is declining at an alarming rate, according to Forrester Research. Since January, monthly revenue has fallen 65% and the average size of transactions is down 17%.

But Apple is not alone; the sector overall should experience flat or declining revenues for the next three consecutive quarters, according to Nieslen Soundscan. Plummeting digital music sales come despite healthy growth for media players like the iPod and Microsoft's Zune. Only 3.2% of online households bought at least one download from iTunes last month, Forrester says, making 5.6 transactions on average.

"There's no indication of enormous growth coming," Forrester analyst Josh Barnoff said of the digital-music sector. In fact, many Web users still prefer to buy CDs: They bought 1.7 times as many CDs as music files last quarter. "There's a problem here," he said. "CD sales have fallen 20% over five years. The message here is not that CD sales are coming back, the ability to obtain pirated music is now so widespread the DRM looks to consumers more like a problem than a benefit."

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