Digital music sales drop for first time since advent of iTunes Store, execs blame streaming

Posted:
in iPod + iTunes + AppleTV edited January 2014
Full-year sales of digital music tracks and albums have decreased in 2013 for the first time since Apple launched the iTunes Store in 2003, and industry executives blaming streaming music services like Pandora and iTunes Radio for the drop.

iTunes


According to Nielsen SoundScan, sales of digital tracks fell from 1.34 billion units in 2012 to 1.26 billion in 2013, a drop of 5.7 percent, reports Billboard. Digital album sales also fell 0.1 percent to 117.6 million, down from 117.7 million units the year prior.

The industry was not surprised by the dip in digital per-track performance after three quarters of weak sales, the publication said, but the drop for full-albums was somewhat unexpected given a strong start in early 2013.

Just as they had underestimated the power of digital music sales years before, industry executives appeared to once again be unwilling to cede ground to a new format, this time in the form of ad-supported or subscription Internet streaming services. Earlier in 2013, these people were reportedly reluctant to accept that Internet radio was cannibalizing digital sales, reports Billboard.

Instead of being caught off guard, however, executives apparently struck deals beneficial enough to offset the slip seen by digital sales. The actual results have yet to be revealed as SoundScan has not released its streaming numbers for 2013.

The overall breakdown of album sales marketshare for 2013 saw CDs leading with 57.2 percent, followed by digital at 40.6 percent and vinyl at 2 percent. Cassettes and DVDs made up 0.2 percent of all album sales.

When Apple's iTunes Store -- previously the iTunes Music Store -- opened its digital doors in 2003, it quickly became a popular alternative to brick-and-mortar music stores. Driven by a massive installed iPod, PC and Mac user base, iTunes took over as the No. 1 music seller in the U.S. in 2008, and was the biggest in the world by 2010.

Apple has also fielded its own streaming service in iTunes Radio, which was first announced alongside iOS 7 at last year's Worldwide Developers Conference. Like other streaming solutions, iTunes Radio is free to use with advertising support. iTunes Match subscribers, who pay $24.99 per year, can listen to the service ad-free.
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Comments

  • Reply 1 of 82
    pigybankpigybank Posts: 168member
    Did they ever consider that maybe shitty tracks and shitty albums are the reason for the dip? I use iTunes Radio, Pandora, Spotify, and iTunes Match but if a song is good I still buy it. Maybe people didn't buy as much music because it's all the same Beiber, Ke$ha, One Direction auto-tuned CRAP!
  • Reply 2 of 82
    It isn't the shitty music they're putting out at all...
  • Reply 3 of 82
    jungmarkjungmark Posts: 6,718member
    Apple is doomed!! /s
  • Reply 4 of 82
    did my part today%u2026Pearl Jam (Lightning Bolt) $6.99 special @ iTunes. I see an upward trend starting already!
  • Reply 5 of 82
    I left the iTunes train almost two years ago. After trying to get me to pay to upgrade, I calculated I could stream from Spotify for five years before breaking even. Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?
  • Reply 6 of 82

    Personally I could give a flying F about streaming, I'm firmly in the "Own My Music" camp. Others around me swear by Pandora so to each their own.

  • Reply 7 of 82
    pigybankpigybank Posts: 168member

    You do realize that iTunes Match automatically upgrades all of your tracks, right?  Even ones you didn't buy from iTunes.

  • Reply 8 of 82
    tallest skiltallest skil Posts: 43,399member
    Originally Posted by Object-X View Post

    Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?

     

    Because it wasn’t a codec to which you were upgrading. In retrospect, “pay for higher bitrate” is a really silly idea, so Apple won’t be doing it again. And as we can all freely redownload our music (and everything else) now, you thinking that this would ever happen again is even more foolish.

  • Reply 9 of 82
    They should mention that music was shit for 2013.
  • Reply 10 of 82
    Um it's more like the "state" of music in general that dinged sales... Perplexed why the Apple rags don't "get" the music industry operates like the film industry... It's the product stupid.
  • Reply 11 of 82
    jkichlinejkichline Posts: 1,336member

    You weren't being forced to pay to upgrade anything.  iTunes Music Match makes your entire song library available in the cloud. The upgraded bit rate was just a perk so if you've ripped your friends's CD at 128kbsp, you would get it in 256 AAC just like it was on iTunes. It's a perk.  The real advantage is getting to listen to your music on any device without needing to copy it to every device.  I suspect they would be more apt to throw this in for free in the next year or two but $99/year isn't bad considering all the Internet bandwidth that must cost them.

  • Reply 12 of 82
    john.bjohn.b Posts: 2,722member

    There's a story about free milk and a cow...

  • Reply 13 of 82
    hill60hill60 Posts: 6,992member
    object-x wrote: »
    I left the iTunes train almost two years ago. After trying to get me to pay to upgrade, I calculated I could stream from Spotify for five years before breaking even. Why should I not believe there will be an even better codec and a fee to upgrade within the next five years?

    Spotify $10 a month, $120 a year, $600 for five years.

    So how were you planning to spend $600 "paying to upgrade"?

    iTunes Match only costs $125 over 5 years.
  • Reply 14 of 82
    Originally Posted by hill60 View Post

    Spotify $10 a month, $120 a year, $600 for five years.

    So how were you planning to spend $600 "paying to upgrade"?

    iTunes Match only costs $125 over 5 years.

     

    I’ve never understood the “To be able to access this content, I want to pay for it until the end of time” idea.

     

    Pay once, own forever. 

  • Reply 15 of 82
    dacloodacloo Posts: 890member
    In respect to Spotify, you are also paying for an ever growing library and the software (the service) providing content.

    I personally like Spotify because it is so much better for discovering new music compared to the iTunes buy-then-own concept, even though the majority of my library is in iTunes.

    I'm not a big fan of iTunes Match. I have it, but there's not enough control over which content you want on your device and which content not. My car is where I listen to music. No wi-fi there, so I want to make sure music is on the actual device to avoid data plan issues.
    iTunes doesn't allow me to filter my library by "what's on my device", which then would hide and ignore music dependent on an Internet connection.
    Secondly, as soon as I download music on my iPhone I cannot 'un-download' (remove) music or a playlist. It's there until I reset my library entirely.
    Lastly, Music (and iTunes on desktop, why the inconstant naming?) needs a big overhaul when it comes to UI / UX.
    Navigation is unnecessarily complex and is getting outdated.

    I think Apple needs to re-invent parts of their music business, as I think the current way of doing it is becoming outdated.

    But in the end there will always be two camps: the ones who want to own music and the ones who stream. I do both and like both for their own reasons.
  • Reply 16 of 82
    adamcadamc Posts: 580member
    john.b wrote: »
    There's a story about free milk and a cow...

    In this instance there is no free music because there is a cow involved which you have to feed called subscription.
  • Reply 17 of 82
    solipsismxsolipsismx Posts: 19,566member
    dacloo wrote: »
    I'm not a big fan of iTunes Match. I have it, but there's not enough control over which content you want on your device and which content not. My car is where I listen to music. No wi-fi there, so I want to make sure music is on the actual device to avoid data plan issues.
    iTunes doesn't allow me to filter my library by "what's on my device", which then would hide and ignore music dependent on an Internet connection.
    Secondly, as soon as I download music on my iPhone I cannot 'un-download' (remove) music or a playlist. It's there until I reset my library entirely.
    Lastly, Music (and iTunes on desktop, why the inconstant naming?) needs a big overhaul when it comes to UI / UX.
    Navigation is unnecessarily complex and is getting outdated.

    I think Apple needs to re-invent parts of their music business, as I think the current way of doing it is becoming outdated.

    But in the end there will always be two camps: the ones who want to own music and the ones who stream. I do both and like both for their own reasons.

    1) You can prevent tracks that are not local to the device from streaming over cellular.

    2) You can keep tracks in iCloud that have not been downloaded to a particular iOS device from showing up in Music.

    3) You can easily delete playlists and tracks from the Music app in iOS.

    4) I personally don't want 3 or more different apps on Mac and Windows for storing and playing Music, Videos and Podcasts, and don't think that would be better for the majority. I personally don't want that on iOS either but I least see why that is better for the majority of users.
  • Reply 18 of 82
    I’ve never understood the “To be able to access this content, I want to pay for it until the end of time” idea.

    Not hard to understand at all. It's a service, like cable television: stop paying, stop watching.

    Besides, I thought you couldn't own "content", only license it.
  • Reply 19 of 82
    The reason not to use Spotify and Pandora is because they pay a minuscule amount in royalties to songwriters. If it was their choice they would pay an even lower amount than they do now. They are thieves.
  • Reply 20 of 82
    thepixeldocthepixeldoc Posts: 2,257member
    Just wanna 'tune in' and say that I'm firmly in the streaming camp with Spotify! Love the service and promote it heavily to family, friends and clients.

    Main reason is that for certain people like myself that have an extremely wide, varied and eclectic taste in all kinds of music... it would be financially impossible*** to own even a small portion of what I listen to, even on a daily basis. Of course I 'had' a rather large CD collection that cost a pretty penny, ripped years ago, and which I have backed up on more than one of my countless caseless drives. However, I no longer bother carrying any of the rips with me and have sold or given away all of the CDs a couple of years ago. With that said though, I do carry certain music that I have purchased through Indy Band sites***.

    The absolute coolest thing though, is due to the fact that I'm often responsible for party/event music (my eclectic tastes come in handy), I can simply have the host or promoter create a Spotify account if they don't have one already, create a 'wish/play list' and send it to me. I'll maybe add to it or use a similar list and download all of the tracks (500 limit I believe) to my iPad or MBA, just in case wifi becomes 'spotty' or doesn't exist.

    *** As an aside, the music industry is still changing and evolving and will for some time to come, but IMHO the Big Labels are dying a slow death. The tools and hardware to create a top professional, production quality recording from someone's basement is here and now, making studio recordings superfluous... and even unwanted by some artists that prefer to have total control and peace of mind regarding time pressures to do their thing, how and when they want to do it. The main thing left for Big Labels is promotion and marketing, because even distribution can easily be taken care of through the web using pay tools and social networks. So who really needs that blood sucking layer of authority as a creative? I would say, no one.

    There's a heck of a lot of young kids and music fans coming through the schools with the chops to do even better marketing than the Big Labels provide. An artist that puts 1 or 2 social promotion managers 'in their band' is just as important as adding a technical engineer and a good lawyer these days.

    I think this is they way of the future, in addition to bands releasing on networks like Pandora and Spotify FIRST, rather than after they've made a name for themselves. Also, it's been plain to see this day coming, that simply selling albums and singles is not going to pay the bills for the majority of artists or the labels.

    I use the word 'artist' specifically here, because it's no different than any creative endeavor these days, whether photographer, graphic designer, director, writer... and/or musician. The sales of the 'picture, logo, film, musings or song' is not enough. They must be re-packaged, repurposed, merchandised and licensed (that's why a good lawyer is a must!).

    NOTE: I would like to add that this also applies to "software developers/artists"as well. It was reported (I believe) yesterday that Rovio will be going the 100%-Free route for their next games, after seeing that more than 60% of their revenue last year came from licensing and merchandise.
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