The transition of iTunes: from downloads to streaming


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After ten years of growth of music downloads for iTunes, Apple saw that the revenue from music downloads started to decrease in 2013. For the music labels, the income from the download sales decreased with 2.1% in 2013. As opposed to the revenues from streaming, which increased with 51%. This shows that there is a shift from customers owning music to customers who can access music ‘on demand’.  The main focus of Apple is still on the ownership of music. However, it is facing the competition of streaming services such as Spotify and Deezer, which focus on the access to music on demand.

With the launch of iTunes Radio, Apple had the hope that it would help increase sales of songs on the iTunes Store. However, this was not the case. Therefore, Apple considered the option of starting a streaming service, such as Spotify, within iTunes. However, there are a few streaming services which are established and have rapidly grown over the last couple of years. This would have made it hard for Apple to beat the competitors. This is one of the main reasons why Apple acquired Beats because this company has a music streaming service. Apple operates iTunes separately from Beats streaming service in order to have a smooth transition from downloads to streaming. In the future, the download revenues will lose it against the revenues from music streaming. Then, Apple will make iTunes its main streaming service instead of Beats.

According to the Guardian, there are several ways in which Apple will be able provide a better music streaming service than competitors. The first option is a big catalogue and exclusives. The second option is big distribution through iOS and low pricing. The third option is better music discovery features. The fourth option is to launch iTunes for Android. The fifth option is to make music videos part of the service. The last option is to be the most artist-friendly streaming service.

Do you think that it is a smart move of Apple to use Beats Music’s streaming service for the transition of iTunes from downloads to streaming? Which of the options, provided by the Guardian, do you think will help Apple to provide a better music streaming service than competitors in the future?

Sources:

– Costine, J. (2014) Apple will operate Beats music’s streaming service separately from the iTunes download store, http://techcrunch.com/2014/05/28/a-smooth-transition-from-music-sales-to-streaming/

– Dredge, S. (2014) 7 ways a streaming iTunes could compete with Spotify and its rivals, http://www.theguardian.com/technology/2014/mar/24/apple-streaming-music-itunes-spotify

– Hughes, N. (2014) Apple considering ‘dramatic’ overhaul iTunes Music Store to boost sales, http://appleinsider.com/articles/14/04/09/apple-considering-dramatic-overhaul-of-itunes-music-store-to-boost-sales—report

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