Spotify royalties surpass Apple's iTunes in Europe by 13%, report says
In what could be a bellwether for the global recording industry, royalty payments from streaming service Spotify have reportedly overtaken earnings from Apple's iTunes music store in Europe, a drastic shift from only last year.
Kobalt Music Publishing, a company that represents and collects royalties on behalf of music makers in Europe, says its customers brought in an average of 13 percent more revenue from Spotify than iTunes over the first quarter of 2014, reports The Wall Street Journal.
Kobalt's customer list numbers near 6,000 and includes big-name acts like Bob Dylan, Dave Grohl, Paul McCartney, Maroon 5 and Max Martin, among other chart-toppers.
The data shows an abrupt trend away from music downloads and toward streaming. For example, royalties from iTunes outpaced Spotify by 32 percent during the third quarter of 2013, but that number dropped to 8 percent in the following three-month period, Kobalt notes. The company told TechCrunch that revenue from streaming services tripled over the past two years.
"Spotify overtaking iTunes in Europe is an important new milestone in streaming," said Kobalt CEO Willart Ahdritz. "The music industry's infrastructure is failing them, unable to efficiently account for the enormous volumes of data from digital transactions."
While the statistics are limited to one company from one market, the data is in line with a previous Journal report saying overall iTunes music sales were down 13 to 14 percent for the year as of late October.
For the fourth fiscal quarter of 2014, Apple announced iTunes earnings of $5.4 billion, up 22 percent from the same three-month period last year. For 2014, Apple reported a total of $10.2 billion in net iTunes Store sales compared to $9.3 billion over the course of 2013. The numbers combine revenue from other software and services, however, including the lucrative iOS App Store.
Apple rolled out its own music streaming service in iTunes Radio, which launched in 2013 alongside iOS 7. The Cupertino tech giant is also rumored to be working on a rebranding of Beats Music following a $3 billion acquisition that included the firm's headphone division in August.
Kobalt Music Publishing, a company that represents and collects royalties on behalf of music makers in Europe, says its customers brought in an average of 13 percent more revenue from Spotify than iTunes over the first quarter of 2014, reports The Wall Street Journal.
Kobalt's customer list numbers near 6,000 and includes big-name acts like Bob Dylan, Dave Grohl, Paul McCartney, Maroon 5 and Max Martin, among other chart-toppers.
The data shows an abrupt trend away from music downloads and toward streaming. For example, royalties from iTunes outpaced Spotify by 32 percent during the third quarter of 2013, but that number dropped to 8 percent in the following three-month period, Kobalt notes. The company told TechCrunch that revenue from streaming services tripled over the past two years.
"Spotify overtaking iTunes in Europe is an important new milestone in streaming," said Kobalt CEO Willart Ahdritz. "The music industry's infrastructure is failing them, unable to efficiently account for the enormous volumes of data from digital transactions."
While the statistics are limited to one company from one market, the data is in line with a previous Journal report saying overall iTunes music sales were down 13 to 14 percent for the year as of late October.
For the fourth fiscal quarter of 2014, Apple announced iTunes earnings of $5.4 billion, up 22 percent from the same three-month period last year. For 2014, Apple reported a total of $10.2 billion in net iTunes Store sales compared to $9.3 billion over the course of 2013. The numbers combine revenue from other software and services, however, including the lucrative iOS App Store.
Apple rolled out its own music streaming service in iTunes Radio, which launched in 2013 alongside iOS 7. The Cupertino tech giant is also rumored to be working on a rebranding of Beats Music following a $3 billion acquisition that included the firm's headphone division in August.
Comments
Obviously Apple saw this coming.
Labels now pay for being too greedy.
Beats + iTunes Radio + Trent Renzor Secret Project = iTunes 2.0 (I know we are on v12 right now).
What is on the Apple anvil is a significant overhaul of the music service/ store.
The only thing is that they have to roll out their streaming service to other countries as well.
I felt this one coming - once I used Spotify it changed how I thought of music. Not something I listen to over and over like a toy I bought, but lots of new music, like cable. I went through all of the albums I could never afford. Listened to a channel for a particular mood I'm in. Listened through the billboard top 20 each week. My friends think I'm the musically inclined one all of a sudden, cause I know all the newest songs. When I saw how good Spotify was, I couldn't believe Apple wasn't already doing this. When iTunes radio came out, I realized they weren't interested in changing their profitable business, only keeping people from switching to Spotify. Now, they're losing ground. I'll be interested to see if the Apple designers, engineers, and ad machine can erase a several year head start. I wouldn't be surprised.
I guess that's why Apple acquired Beats. I even let my iTunes Match subscription expire because Spotify has all the albums that I ever uploaded onto iTunes Match and Spotify seems to stream faster than Apple's cloud in Hong Kong.
It's simple: Spotify is available on Android, iTunes isn't. If you don't address 70% of the smartphone market, you can never remain the biggest in revenue
Most of that 70% pays for nothing. So they are not really a revenue source which is why with 70% Google is only just catching iOS in mobile revenue.
It's simple: Spotify is available on Android, iTunes isn't. If you don't address 70% of the smartphone market, you can never remain the biggest in revenue
Not just Android but Windows, Windows Mobile, OSX, iOS, Linux and even Chrome OS in the form of a very good web app, which I actually prefer over the desktop version.
No-one wants to rent music! /s
Don't forget Blackberry... I hear they are gonna make a comeback and be as big as Windows Phone.
I agree with genovelle. Android users typically have the mindset of not paying for anything. And I definitely don't mean all users, just a huge portion.
Apple doesn't need the market share to still keep iTunes successful. Sure it would help, but the quality of users is not as high.
Listen to music for free. Great business model. No wonder it "sells".
Spotify is like Google for music. I don't have the numbers, but I bet the majority of Spotify's users are free, ad supported accounts.
And just like with YouTube videos with ads - the only one making money are the ones with a great number of videos/ songs with very high play count. In other words big publishers or superstars. There's no way to get a revenue to pay for the rent, from either streaming music or video if you're not in the multiple high view/ play count region. It's just a really, very, extremely bad business model for independent musicians and artists. Not all artists are superstars. Most artists just work, and get the ends to meet. And Spotify... Stopify.. is making it sort of harder for them, since the mindset of the masses has gone from buy to own, to listen for free.
In Sweden, and probably other countries too, internet service providers has started to offer Spotify premium included.. which only continues to set their minds to "streaming music is free". It's sad.
I instead welcome Soundcloud, Bandcamp, Patreon etc. Services where independent artists can stay in control themselves. And can connect to supporters in person. 100 supporters on Patreon means more than 1.000.000 ad plays, and kicks the whole ad system in the butt.
If musicians embraced these models with all their might, they could earn their living, instead of hunting to become the next million dollar hit superstar.
Power to the people.
Uh, I avoid iTunes / App Store and Mac App Store at all costs.
I love and wanted to use them all, but as European its not really possible.
If you get to work in another state and you change your bank cards (as you often has to, if you want to get paid) - all your purchases are lost!
Pif*paf*puf - lost.
No more updates, no redownloads. Apple-ID is not regulated under EU law, but state laws. A real bummer!
It has happened to me as thousand of other Apple users.
Big fail, and due to this I use Sportyfi or import regular CD's which both can be taken cross state without any issue.
My Apple ID account is landlocked in the UK, though I live and work in France.
Yet oddly Google's music service isn't free and has no ad-supported version.
And while Taylor Swift may be a singer of iffy actual talent, her pulling of her catalog from Spotify will be the start of a trend for other artists to do the same.
I have yet to not be immediately disappointed by a streaming service, including iTunes Radio (which is just terrible...why on earth is it mixing blues songs in a classic rock playlist?). I will continue to buy music. (I haven't tried Beats Music yet, so holding back judgment on it).
And while Taylor Swift may be a singer of iffy actual talent, her pulling of her catalog from Spotify will be the start of a trend for other artists to do the same.
Taylor Swift not on Spotify? Doing my subscription right now.
All products go through a lifecycle where they start off premium and over time competition creeps in and the price drops. Apple usually doesn't bother with low margin products, content to own the high end of the market. Is there a high end for music, if so what does it consist of and how can Apple claim it? Is it lossless recordings or something else? Is it the kind of music sold, rare instead of top 10?
If Apple would have made iTunes Radio more like Spotify it would haven been far better off. This Pandora style radio just plain sucks! It doesn't work very well, I've lost an entire playlist that I had built up, sometimes my music doesn't play. It doesn't recommend music that I like even when I like a song and tell it to play more like it, etc. It just doesn't work very well. With a Spotify type system I could listen to the entire song as many times as I want (maybe slightly less quality), and then if I wanted the better quality I'd buy it. Maybe if you buy it then it would stream higher quality. There are still many ways to do a Spotify type system and keep sales up. Yes, a lot of people would stop buying songs and just stream and thats okay too. Apple has ads for this reason. If you don't want ads, subscribe.
Also, these days I think people WOULD rather rent their music than pay $1.29 for a song. Its so much easier to just stream music from your phone than use up precious storage on a 16GB iPhone, especially since Apple seems to think 16GB is enough these days for most people but we won't go there.
Not so fast, she left one song on there.