Apple is preparing a complete revamp of Beats Music that will directly integrate the streaming service into all of its products. The timing could not be more perfect, because streaming subscriptions like Spotify have finally overtaken CD sales.
Sales from streaming music providers like Spotify and Rhapsody hit $1.87 billion in the US in 2014, according to The Financial Times. That’s a 29% increase from 2013 and 27% of the entire music industry’s revenues.
CD sales, on the other hand, dipped 12.7% to $1.85 billion in 2014. Thanks to its newfound trendiness, sales of vinyl nearly doubled, but still only accounted for $315 million.
Because of the iTunes Store, digital downloads have been the music industry’s main breadwinner for the past decade. But those sales have been on a steady decline since 2012. They now account for just 10% more of the music industry’s revenues than streaming.
The writing has been on the wall for a long time that streaming is the future. Now it’s time to see if Apple can do what it did with the iTunes Store a decade ago and make itself the leader again.
Alex Heath is a journalist who works for Tech Insider. He’s the former co-host of The CultCast. He has been quoted by the likes of the BBC, KRON 4 News, and books like “ICONIC: A Photographic Tribute to Apple Innovation.” He lives in Lexington, Kentucky. If you want to pitch a story, share a tip, or just get in touch, additional contact information is available on his personal site. Follow him on Twitter.
5 responses to “Apple is diving into music streaming at the right time”
So while streaming went up by 29% in 2013 , vinyl sales rose a whooping 51.8% over the same period, and vinyl sales now account for 6% of all physical music sales. Convenient to leave the vinyl statistic out for the purposes of this article.
No ones saying vinyl will replace streaming, but its certainly no “hipster” fad as it continues to outgrow streaming each year. Theres a reason audiophiles listen to their music on vinyl.
Lastly, all the increases in streaming are actually pretty detrimental to the music industry, as it’ll never sustain itself on the meager profits from streaming, and don’t even get me started on how little artists make from streaming.
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Excludability is the ability to prevent someone who has not paid for a product to nevertheless use and enjoy it. The digitization of music has vastly reduced the excludability of recorded music. Musicians have no choice but to rely more on live performances to make a living. Can’t do nuthin’ about it. That’s just the way things are now. At least live music can attract an audience. If you’re a journalist, you can’t exactly do a summer tour to make up for the collapse of your profession’s business model.
Yeah I agree with all that. Streaming has definitely helped in some ways by democratizing music access to both fans and musicians by providing the smallest artist immediate world exposure that was unheard of 20 years ago. Streaming just isn’t profitable to to hardly anyone, and people must realize it will only be a very small part of the total music industry in terms of revenue.
The problems with streaming so far is this. Not everyone has a good connection to provide a reliable streaming of music. I have played around with iTunes Radio, Tidal, Spotify, and a few others and my ISP connection sucks so ALL of them suck and it’s because of my iSP and I just don’t have a good enough connection for any type of streaming of audio OR video. I hate listening/watching a song/movie and it stops to buffer. So, I either buy the content in physical form or download a digital version and then I don’t have that streaming problem.
Streaming from a cellular connection can cost a lot of money if you are limited in the amount of data you can download through your cellular service.
The bottom line for these companies is that NONE of them have even made a profit. Spotify, which has the most number of actual paid subscribers loses money. Tidal, which just recently launched hasn’t either and they charge $20 a month for Lossless, which does sound better. Jay Z just bought Tidal about a week or two ago, BTW.
Obviously, Apple does not rely solely on iTunes anything for their profits, because whatever profits they make is teeny tiny compared to how much profits they make from hardware sales of iPhones, iPads, and Macs, so I think Apple is delving into streaming music more of as a means to keep people hooked into iTunes and if they can generate some amount of profits, then it makes it worthwhile. Even a minimal 5% Net Profits is probably all they can get from Streaming music when/if it actually hits profitability, but so far, NO ONE is making any actual Net Profits from streaming. If Apple reaches several hundred million users to pay for the subscription, they probably could make some Net Profits, but they are currently a long way from that number.
Big question: Will it be available outside the US soon?
Germany is waiting and I hope we will get Apple-Streaming (or Beats) soon!