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Following Apple's Beats Music buy, new data shows digital album sales down 12% while streaming up...

post #1 of 29
Thread Starter 
The latest data from Nielsen shows that sales of digital albums are down 11.6 percent, while purchases of individual tracks are down 13 percent, as on-demand streaming audio has surged 50.1 percent, helping to provide some insight into why Apple purchased Beats Music.



Nielsen SoundScan measures music sales while Nielsen BDS tracks music streams. Both on Friday revealed that overall album sales, including physical and digital media, are down 14.9 percent in the first six months of 2014, with digital album sales down 11.6 percent.

While sales of albums through services like iTunes have declined, users have embraced streaming services. Total on-demand media is up 42 percent, with audio accounting for the most -- 50.1 percent. Video on-demand was up 35.2 percent in the first six months of the year.

One segment of the physical media market is growing, however, as sales of vinyl increased 40.4 percent to 4 million units. That was up from 2.9 million units sold in the first six months of 2013.

The latest data showing the growth of streaming audio comes after Apple paid $500 million for Beats Music, an on-demand subscription service started by headphone maker Beats. Apple paid another $2.5 billion for the company's headphone division in an acquisition that Jimmy Iovine and Dr. Dre as employees.


Photo via Paul Stamatiou.


Apple made it clear that the acquisition of Beats Music was key to its blockbuster $3 billion deal, as the company intends for it to complement its existing iTunes offerings. Apple already offers its own iTunes Radio service, but that relies on a series of randomized "stations" rather than allowing users to select their own tracks on demand.

Apple said it plans to keep the subscription Beats Music service intact, alongside the existing iTunes Radio free streaming, and song purchasing through the iTunes Store. The company emphasized that the deal will make its music lineup "even better," in the words of iTunes and online services chief Eddy Cue.
post #2 of 29

I know I personally am buying a lot less and streaming Spotify a lot more. Then again, most of the music I listen to I have owned for years, much of which is on Spotify.

 

Dunno what the future holds for all this. I'll look into Beats Music once Apple gives me a reason to. Pretty happy with Spotify.

post #3 of 29

I spend a lot of time on Spotify and iTunes Radio.  I have a large music library but it doesn't come close to Spotify.  Just their new releases alone could take days and days to listen to.  I'll always have my own music library but streaming services are hard to beat.  There's definitely room in this world for both business models and I think they could work to serve each other.  Streaming services are great for discovery of artists I've never heard of.  Apple should easily be able to offer a decent streaming service with all its catalogs.  That's an awful lot of content Apple could get on its devices.  But the fact that you can't listen to whole albums in iTunes Radio really sucks and that's where Spotify excels.

 

Steve Jobs had said that people really want to own music and that may be true but there are people who simply want to listen to lots of various types of music that they might not want to actually own.  Apple should address the needs of both in order to stay competitive.  Apple's got plenty of money from selling hardware, so what's the big deal of losing some money on content.

post #4 of 29
Quote:
Originally Posted by Constable Odo View Post
 

Steve Jobs had said that people really want to own music...

 

Just an fyi... Steve passed away going on almost 3 years now.

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post #5 of 29
Quote:
Originally Posted by Constable Odo View Post
 

Steve Jobs had said that people really want to own music and that may be true but there are people who simply want to listen to lots of various types of music that they might not want to actually own.

 

It's interesting that you mention that. While I was reading the article I was thinking, "I prefer to buy songs and have them in my own library."

 

That got me wondering WHY I prefer that? What's the advantage? Sure, I'm not dependent on a subscription for access and I can play music in places where there's no internet access (most notably the subway), but beyond that, I'm not sure I understand my own desire to "own" my own music library. Even if I never listened to even one track beyond what I'd hear in my own library, why not use a service that eliminates the headaches I have now with sync across machines and updating the iTunes library on each of them?

 

Before I got rid of my car I would hear a song I liked on the radio and later buy it on iTunes. Lately I've noticed that not having that car radio means I'm no longer hearing what's new and popular. Am I missing out on stuff I would enjoy? A streaming service would both provide a replacement for that "exposure mechanism" AND eliminate the need to remember what it's called so I can buy it later.

 

Maybe I should look into streaming...


Edited by Lorin Schultz - 7/4/14 at 7:48am

Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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post #6 of 29
All of the streaming is being done on Spotify, which is a phenomenal service for the consumer and artist. It is so good for the Artists that it's actually hemorrhaging money with its royalty payments. They lose about 100 million dollars a year because most of their users just take advantage of their free service.

This guy explains it better than I can.

http://www.sturbridgesound.com/blog/new-data-from-soundscan-and-what-it-means-for-musicians
post #7 of 29
Quote:
Originally Posted by AppleZilla View Post
 

I know I personally am buying a lot less and streaming Spotify a lot more. Then again, most of the music I listen to I have owned for years, much of which is on Spotify.

 

Dunno what the future holds for all this. I'll look into Beats Music once Apple gives me a reason to. Pretty happy with Spotify.

 

And Spotify and Pandora aren't making any money, streaming is a money loser at the end of the day.

post #8 of 29
Quote:
Originally Posted by Lorin Schultz View Post
 

 

It's interesting that you mention that. While I was reading the article I was thinking, "I prefer to buy songs and have them in my own library."

 

That got me wondering WHY I prefer that? What's the advantage? Sure, I'm not dependent on a subscription for access and I can play music in places where there's no internet access (most notably the subway), but beyond that, I'm not sure I understand my own desire to "own" my own music library. Even if I never listened to even one track beyond what I'd hear in my own library, why not use a service that eliminates the headaches I have now with sync across machines and updating the iTunes library on each of them?

 

Before I got rid of my car I would hear a song I liked on the radio and later buy it on iTunes. Lately I've noticed that not having that car radio means I'm no longer hearing what's new and popular. Am I missing out on stuff I would enjoy? A streaming service would both provide a replacement for that "exposure mechanism" AND eliminate the need to remember what it's called so I can buy it later.

 

Maybe I should look into streaming...

 

Thanks mister record Executive owning is ALWAYS BETTER THAN RENTING.

post #9 of 29

We're going to tell you what you should listen to, and you're going to pay for it, but never own it.

 

Absolutely brilliant.

post #10 of 29
I don't understand streaming music when cellular data rates are now replacing minutes as the core of most telecom business models. If we still had unlimited data for $30/mo I'd get it but for the price of non-wifi connectivity I'm not a fan of streaming yet. Just IMHO.
post #11 of 29
Quote:
Originally Posted by Lorin Schultz View Post

I'm not sure I understand my own desire to "own" my own music library.

The most important reason you mentioned is when you're off the network. I found streaming to be a good way to preview full tracks but I got tired of listening to adverts on the free version and I didn't think it did much to help music discovery. I just ended up searching for artists I already had music from.

I don't see why the two have to be separate. I would like the library and the streaming to be merged. So you'd have your library of offline tracks, it would see which tracks you had and fill your library out with all songs by all artists but the filled versions are streamed versions. In order to make them offline, you have to buy the tracks. You could also reject the added tracks.

There could simply be a button to fetch new songs like the shuffle or loop buttons. This would then keep bringing new tracks based on your existing library and you'd either skip, keep listening or manually add the song, if you don't skip the song, it can add the streamed version to the library for future purchase.

I think the App Store should do this sort of thing too, just keep showing new apps and let people skip it if they're not interested or save for later purchase. You'd sort through hundreds of new items like this knowing you won't come across the same junk over and over.
post #12 of 29
"Nielsen SoundScan measures music sales while Nielsen BDS tracks music streams"

So one is 99 cents and the other is effectively worth zero. But let's compare them directly, just like $150 handsets and $800 iPhones.

"sales of albums through services like iTunes have declined"

Note that Nielsen didn't report iTunes sales are down 12%. Who is losing more download sales: Amazon, Google Play, Zune, or iTunes? Apple's iTunes revenues over the last two quarters are flat, but you can be sure everyone else's are evaporating if the industry is down 12%. People who buy $150 low end phones don't buy media either. Just ask Google.

On top, Nielsen supplies only comparisons of percentages of entirely different things in wildly different quantities. A 12% drop in all song sales is not "half the size" of a 50% increase in streams. Without numbers for either, all of the percentages cited are entirely meaningless. Percentage of what?

The companies streaming music have to pay per-stream royalty fees, so the more subscribers they have and the more streams they deliver, the more costs they incur. They aren't profitable now and will burn through their cash until they find a way to make money.

"According to a report published by Generator Research last November, the current business model for streaming music is 'inherently unprofitable.' Andrew Sheehy, the main author of the report, concluded: 'Our analysis is that no current music subscription service%u2014including marquee brands like Pandora, Spotify, and Rhapsody%u2014can ever be profitable, even if they execute perfectly.'%u201D - http://www.businessweek.com/articles/2014-05-21/why-spotify-and-the-streaming-music-industry-cant-make-money

Compare that to iTunes, which was never intended to make money, only to create an ecosystem for iPods, Macs and then iOS devices. Apple is "unintentionally" making money, but investing most of that back into new deals. So for Apple, iTunes is basically an Amazon, but an Amazon that helps it make billions of dollars on hardware sales.

Spotify etc are Amazons that don't appear to have enough capital coming in to even perpetuate their operations, let alone grow. And they only help other companies to sell their hardware. To use Spotify or Pandora, you need an iPhone (or some other device). But when you buy that device, Spotify and Pandora get nothing. That's not a very good business to be in.

And if Apple does care about streaming, those companies will increasingly compete against Apple, which has the perpetuating capital they lack.
post #13 of 29
Quote:
Originally Posted by AppleZilla View Post

I know I personally am buying a lot less and streaming Spotify a lot more. Then again, most of the music I listen to I have owned for years, much of which is on Spotify.

Dunno what the future holds for all this. I'll look into Beats Music once Apple gives me a reason to. Pretty happy with Spotify.
Most of the music I listen to I have owned for years too and in my iTunes library. Since I can stream all my songs to any of my devices, I have no need for Spotify. Even my playlists stream even over my unlimited data plan.
post #14 of 29
Quote:
Originally Posted by Marvin View Post

The most important reason you mentioned is when you're off the network. I found streaming to be a good way to preview full tracks but I got tired of listening to adverts on the free version and I didn't think it did much to help music discovery. I just ended up searching for artists I already had music from.

I don't see why the two have to be separate. I would like the library and the streaming to be merged. So you'd have your library of offline tracks, it would see which tracks you had and fill your library out with all songs by all artists but the filled versions are streamed versions. In order to make them offline, you have to buy the tracks. You could also reject the added tracks.

There could simply be a button to fetch new songs like the shuffle or loop buttons. This would then keep bringing new tracks based on your existing library and you'd either skip, keep listening or manually add the song, if you don't skip the song, it can add the streamed version to the library for future purchase.

I think the App Store should do this sort of thing too, just keep showing new apps and let people skip it if they're not interested or save for later purchase. You'd sort through hundreds of new items like this knowing you won't come across the same junk over and over.
They could easily do this since all iTunes purchases can be streamed to any of your devices. When you turn on the feature any songs that are not on the device shows up as streamable. You can even just tell Siri to play a song or artist and it will play whether it's on the device or iTunes in the icloud. If you have the whole album it will play the whole thing back to back.
post #15 of 29
Quote:
Originally Posted by Danox View Post
 

Thanks mister record Executive owning is ALWAYS BETTER THAN RENTING.

 

Thanks Mr. Reading Comprehension! Or would that be Mr. Reasoning Skills? You didn't address a single point I made in my comparison, yet made an absolute pronouncement of conclusion. Bravo!

 

It may well be that, for YOUR particular circumstances, "owning" music is better than streaming, though I doubt very much you've ever done any actual objective assessment so it's unlikely you're in a good position to declare authoritatively what's best for YOU, much less anyone else. I just did some analysis of my own situation and still can't decide what's best for me, so for the time being I'll just stick with what has been a working program so far and see what develops on the other side. I wish you happiness and satisfaction with whatever you decide to do, since it doesn't affect me in any way, shape or form, just as how what I do doesn't affect you in the slightest, right?

 

As you grow up, you'll slowly begin to realize that the world is not a place of absolutes. There are always complications and exceptions. Perhaps you will also learn to respect that the views of others may sometimes not match your own.

Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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post #16 of 29
Quote:
Originally Posted by bdkennedy1 View Post

you're going to pay for it, but never own it.

That's the difference between "services" and "products"

You don't own the TV shows and movies that get piped into your house via cable or satellite either. But you have access to them by simply paying a monthly fee.

The people who subscribe to a streaming music service are well aware that they don't own the music. And that's actually part of the appeal.

Instead of paying $1 for each and every song they'd ever wanna listen to... people are subscribing to a huge catalog.
post #17 of 29
That's a stupid cynical responds. Try reading his post again and you'll see your reply doesn't make any sense.
Quote:
Originally Posted by island hermit 
Just an fyi... Steve passed away going on almost 3 years now.
post #18 of 29
I discovered a great music streaming service featuring curated content and I've been listening to it for decades. It's called National Public Radio. 👨

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post #19 of 29
Quote:
Originally Posted by Lorin Schultz View Post
 

 

It's interesting that you mention that. While I was reading the article I was thinking, "I prefer to buy songs and have them in my own library."

 

That got me wondering WHY I prefer that? What's the advantage? Sure, I'm not dependent on a subscription for access and I can play music in places where there's no internet access (most notably the subway), but beyond that, I'm not sure I understand my own desire to "own" my own music library. Even if I never listened to even one track beyond what I'd hear in my own library, why not use a service that eliminates the headaches I have now with sync across machines and updating the iTunes library on each of them?

 

Before I got rid of my car I would hear a song I liked on the radio and later buy it on iTunes. Lately I've noticed that not having that car radio means I'm no longer hearing what's new and popular. Am I missing out on stuff I would enjoy? A streaming service would both provide a replacement for that "exposure mechanism" AND eliminate the need to remember what it's called so I can buy it later.

 

Maybe I should look into streaming...


Eh, "new and popular" music is mostly garbage these days.  There's always some new and obscure music out there that's good, but maybe 1% of what's "popular" has ever been decent. 

 

Keep in mind that "popular" music doesn't mean what people actually like, it means what they've been told to like by the radio overplay, as determined by the collusion of radio conglomerates and record labels.  Doesn't matter what's good, it's what got shoved down our throats for years. 

 

Streaming is somewhat better, in that you can define a channel starting with some good music, but there's still a weighting given to whatever schlock the conglomerates are trying to shove at us.  iTunes Radio actually was pretty good at not doing that, hopefully it'll stay that way, but I'm not holding my breath after Apple pulled this stupid Beats deal.

post #20 of 29
Quote:
Originally Posted by SpamSandwich View Post

I discovered a great music streaming service featuring curated content and I've been listening to it for decades. It's called National Public Radio. 👨

The only music I've ever heard on NPR are jingles. lol.gif
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post #21 of 29
Quote:
Originally Posted by DarkVader View Post
 

Eh, "new and popular" music is mostly garbage these days.  There's always some new and obscure music out there that's good, but maybe 1% of what's "popular" has ever been decent.

 

My experience has been different. Whenever I get adventurous and start seeking out decent music that just hasn't had exposure, THAT'S when I hit the "1%" challenge. Sure there's good stuff out there, but there are mountains of crap, too! I just don't have the energy to wade through millions of bad tracks in search of the gem in the pile. Radio acts as a kind of shit filter that gets rid of the obvious chaff. It ain't perfect, but it works well enough for me.

 

Besides, for me music is a social catalyst. In a group setting, try playing your latest "find" and see what kind of reaction you get. I can play a radio "hit" -- even a piece of crap -- and the room lights up.

Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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Lorin Schultz (formerly V5V)

Audio Engineer

V5V Digital Media, Vancouver, BC Canada

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post #22 of 29
Quote:
Originally Posted by dasanman69 View Post

The only music I've ever heard on NPR are jingles. lol.gif

Strange comment, I regularly listen to everything from classical to jazz. There are often several NPR stations from different cities within the radius I am driving in so typically there is a some very erudite program on science or current world situations on one while flipping to another NPR station there will be a concert. Best radio stations on the air, bar one. I am thrilled they've now added Apps for NPR, I won't have to sit in the car for ten minutes after I get home to hear the end of some amazingly good program before i can go in the house! 1biggrin.gif
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post #23 of 29
Quote:
Originally Posted by Constable Odo View Post
 

Steve Jobs had said that people really want to own music and that may be true but there are people who simply want to listen to lots of various types of music that they might not want to actually own. 

The difference is, Steve Jobs had taste. That means he was very picky about what he liked in music (Dylan), clothes (Levis), cars (Mercedes) etc. And when he found something he liked it was a rare find, so he wanted to own it and keep it.

 

Most people aren't like that, they're happy to let just random anything wash over them.

post #24 of 29
Quote:
Originally Posted by digitalclips View Post

Strange comment, I regularly listen to everything from classical to jazz. There are often several NPR stations from different cities within the radius I am driving in so typically there is a some very erudite program on science or current world situations on one while flipping to another NPR station there will be a concert. Best radio stations on the air, bar one. I am thrilled they've now added Apps for NPR, I won't have to sit in the car for ten minutes after I get home to hear the end of some amazingly good program before i can go in the house! 1biggrin.gif

The NPR by me is mostly talk radio.
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"Just because something is deemed the law doesn't make it just" - SolipsismX
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post #25 of 29
Streaming replaced the radio, it does not replace my music player. Catchy new pop hits, top 40 stuff, and occasional music sampling is fine with streaming. At the end of the day, I want to only music that I love and at the format and bitrate closest to the artist original recording. Streaming does not replace music purchasing.
post #26 of 29
That's a very personal thing.

I created playlists in Spotify and downloaded the songs for offline use when I consider then to be part of my 'classics'.

To me, streaming is a technical difference from downloading mostly.
Quote:
Originally Posted by Vision33r View Post

Streaming replaced the radio, it does not replace my music player. Catchy new pop hits, top 40 stuff, and occasional music sampling is fine with streaming. At the end of the day, I want to only music that I love and at the format and bitrate closest to the artist original recording. Streaming does not replace music purchasing.
post #27 of 29
I found this shocking: Aerosmith made more money from Guitar Hero than any album they ever released. 1eek.gif Engadget dredged up the article today, originally written in 2008.
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post #28 of 29
Quote:
Originally Posted by Gatorguy View Post

I found this shocking: Aerosmith made more money from Guitar Hero than any album they ever released. 1eek.gif Engadget dredged up the article today, originally written in 2008.

I think what's been said before, that there is no money to be made in music except in touring and merchandise, has been true for a long time.

Proud AAPL stock owner.

 

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Proud AAPL stock owner.

 

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post #29 of 29
Quote:
Originally Posted by Gatorguy View Post

I found this shocking: Aerosmith made more money from Guitar Hero than any album they ever released. 1eek.gif Engadget dredged up the article today, originally written in 2008.

That's from any single album, not cumulative, which I wouldn't say is all that surprising given the price difference between a game and an album:

http://www.vox.com/2014/7/11/5890237/aerosmith-made-more-money-from-guitar-hero-than-from-any-one-of-its-albums

They sold 150m albums cumulatively, each band member has over $100m and 4m copies were sold of their version of the game from which they are paid a royalty. Overall, they made more money from music. The guy from Activision clearly wants other musicians to license their music to them.

Alternate distribution methods are obviously lucrative though, even just for marketing. Some music videos on Youtube have over 0.5 billion views.

Sometimes money can be made in ways you wouldn't even think. Lily Allen was offered bitcoins in return for a gig and she turned it down:

http://www.telegraph.co.uk/technology/news/10556820/Lily-Allen-regrets-turning-down-118m-bitcoin-payday.html

She'd have had trouble selling that many coins to get the cash but money doesn't always come directly from the art. It's important to fans to maintain some artistic integrity though.
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