Secretive Apple doesn't break out revenues from iTunes, but Forrester conducted an analysis of credit card transactions over a 27-month period. And this year's numbers aren't good.

While the iTunes service saw healthy growth for much of the period, since January the monthly revenue has fallen by 65 per cent, with the average transaction size falling 17 per cent. The previous spring's rebound wasn't repeated this year.

And it isn't just Apple's problem. Nielsen Soundscan has grimmer news for prospective digital download services, indicating three consecutive quarters of flat or declining revenues for the sector as a whole.

Personally, I don't mind paying a buck a song, but I don't like the idea that I can only copy it a couple times. Not as a pirating thing, but because I have a couple MP3 players and sometimes like to burn CDs for myself... so I rarely buy tracks online.

UPDATE: Also note that the iTunes Store, with its razor-thin margins, has never been a profit center for Apple—it exists to sell iPods, as Steve has often happily said. Which just means that the other music stores that don't have iPod sales to draw on are just at that much more of a disadvantage. If iPod sales are up 400%, and people aren't abandoning iTunes in favor of other forms of digital downloads, then Apple has no reason to worry.

They win in an up market, and they win in a down market. It's good to be the Steve.

Pointed out by Damien Del Russo, whose theory suggests to me that a lot of those new iPods are probably being bought as replacements for old iPods, and don't necessarily represent new blood for the iTunes store:

Also, it may be that many people have "enough" music now. Wherever they got it, someone like me, my computer has all the old music I want - now I just buy new stuff. And new stuff is not bought nearly as quickly as when iTunes was new and I had a huge backload of artists I wanted to check out. It's not that it isn't cool, I just already have "most" of what I want. The rush was in attaining that "most" in the first place.

As for movies, you just can't beat the Netflix model. The thing that Netflix needs to do to update their model is allow for downloads instead of mailing DVDs. That is the model though - $18 a month, watch what you want from your queue, and your queue auto-updates after you watch (and confirm deletion). It is funny because it is the OPPOSITE model of what works for music. In short, renting music sucks, renting movies rocks.

I hope Apple comes to realize that, because I'd love to use iTunes for my movie-watching.

UPDATE: Depending on how you slice the numbers, the picture that emerges can vary quite a lot. Blackfriars' Carl Howe posted a rebuttal with graphs, and then an expansion, which only serve to muddle the story. As does Forrester's new response, which essentially says "Whoa, whoa, don't jump to conclusions here".

I still think my suspicions hold, and we pretty much have to wait until Steve breaks out the Keynote slides next month before we know for sure. Though I doubt he'll be calling that much attention to it if the news is bad.

Of course, "bad" is a relative term.