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Since its launch in September 2013, iTunes Radio has skyrocketed in success, outpacing even Spotify in popularity. At the same time, U.S. digital album sales are down 13 percent and individual track sales are down 11 percent. According to Billboard, Apple is thinking of turning iTunes Radio into something more akin to Spotify and even making an Android app so that more mobile device users can get in on the action.
While sales of digital music have been on a downturn, revenue from streaming services has taken an upturn. According to the Recording Industry Association of America, streaming services generated $1.4 billion in subscription, advertising, and licensing revenue in the U.S. in 2013, up 39 percent from the prior year. Music downloads were down 3.2 percent overall to $2.9 billion.
Music industry analysts believe that services like Pandora, Spotify, and iHeartRadio are drawing consumers away from download sales, which Apple dominates more than 40 percent of. Under the stress of a changing global music listening environment, Apple is looking for ways to stay on top as its most lucrative service starts to decline.
“They are feeling out some people at labels on thoughts about transitioning its customers from iTunes proper to a streaming service,” says one major label source. “So when you buy a song for $1.29, and you put it in your library, iTunes might send an e-mail pointing out that for a total of, say, $8 a month you can access that song plus all the music in the iTunes store. It’s all in the ‘what if’ stage.”
Billboard points to several reports that claim Apple is looking into the possibility of making iTunes Radio a standalone app. It is possible the company would then offer tiered music listening services in the same way Spotify does, which offers different features at different prices.
Apple, apparently, is also trying to “clean up” the music store so that consumers can find the right music easier. For example, labels are being asked to weed out unnecessary versions of albums from their top 100 artists. Currently, an artist may have a dozen versions of a greatest hits album that are all listed in the iTunes Store. Apple wants each of these top artists to only have two greatest hits albums – one at the regular price and one deluxe version.
It makes sense that Apple is looking for a way to make money in the new digital streaming market. The company is good at figuring out a way to profit in an ever-changing world. It may just be a matter of time before no one is buying music, but everyone is paying for it. Apple is smart to already be looking for a way to dominate this market.
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