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Very smart point from Asymco analyst Horace Dediu regarding the real impact of shifting media consumption patterns on legacy gatekeepers.
He estimates that iTunes’ average revenue per user (ARPU) has fallen from over $100 in the fourth quarter of 2007 to about $39 by the fourth quarter of 2012. Over that same time, the number of total iTunes accounts has roughly doubled, from around 250 million to roughly 500 million.
By itself, that’s not terribly surprising: later adopters tend to be less avid users than early adopters. What’s notable is the shift in the mix of spending. That growing yellow band in the middle of the bars represents spending on apps; the shrinking blue band on the bottom represents music.
Dediu then says:
As apps have grown to consume more and more of users’ time it stands to reason that they should consume more and more of users’ wallets.
And as accounts reach one billion, we can begin to think about the disruptive impact on other media types. Whereas video, books and music are targeted to smaller user bases, apps are broadly consumed. Developers like Rovio or Supercell can offer their products to billions while TV producers can only hope for millions. Apps are becoming the universal medium for entertainment and iTunes the universal distributor.
Talent is catching on to this faster than those who manage and distribute their work. The inevitable result will be a mass migration of talent away from the established content industries. Old media won’t fade due to a loss of users. It will fade due to a loss of talent.
As I’ve argued here before, that’s precisely the long-term threat facing the traditional TV networks from the rise of OTT services and their growing creative ambitions. It’s not where the viewers go; it’s where the A-list talent decides to set up shop.