If you need another proof that download sales are declining steadily as music lovers increasingly rent their music rather than buy it, here’s one.
Spotify’s head of label relations in Europe, Kevin Brown, revealed last week to an industry outlet that his company is earning more cash across Continental Europe from sales of music subscriptions than iTunes does by selling individual song and album downloads.
As a reference, iTunes back in the summer of 2004 enjoyed a commanding 62 percent share of European music sales.
But having added more than a million active users in the United Kingdom alone in the last four months, Spotify seems poised to beat iTunes. Small wonder Brown is adamant that it’s only “a matter of time” before the Swedish startup overtakes Apple’s digital music store in Europe in terms of revenue.
Why isn’t Apple doing something about it? Doesn’t the firm see the signs on the wall already? Didn’t Tim Cook and Co. get the memo that music downloads are dying a slow death? Read on…
Brown said this past weekend in an interview with Music Week, via The Guardian newspaper:
Some of our partners are saying Spotify is now generating more revenue each month across Continental Europe than iTunes.
Given that download sales are declining and Spotify is growing rapidly, particularly in the UK, it is only a matter of time before Spotify is bigger than iTunes across Europe as a whole.
You might be asking yourself how that’s possible given a study by Edison Research that ranked Apple’s iTunes Radio the third most popular streaming music service in the United States, ahead of Spotify.
For starters, that study focused on the U.S. market.
Chart courtesy of Statista.
Europe is different: I should know, I’m based there now.
For starters, the European market is balkanized – that is, tremendously fragmented between dozens of smaller markets. Each local country/market has its own laws stipulating how digital music sales should be handled.
It’s a nightmare for U.S. companies like Google and Apple because local regulations differ wildly and there are a bunch of middle-men to deal with.
The complex web of digital music regulations and copyright laws in non-EU countries thus far has hampered the arrival of the mythical pan-European iTunes Store for music.
It’s also why it took a local startup that understands the intricacies of the European market to get it right. Spotify was established in October 2008 in Sweden and today has its headquarters scattered across Europe in London, England, Stockholm and Sweden.
By March 2011, Spotify announced passing one million subscribers across Europe before launching its service in the United States on July 14, 2011.
Yes, Spotify’s gains in Europe over iTunes exemplify the decline of the download model. On the other hand, the startup still has a lot of catching up to do in order to overtake iTunes globally – and that’s assuming Apple won’t enter the streaming-music space with a subscription-based music service of its own, which I suspect has been in the works for quite a while.
If Spotify is in fact poised to eventually make more money for labels than iTunes across the globe, I can’t imagine the 800-pound gorilla that is Apple resting on its laurels and doing nothing about it.
I know Apple has the free iTunes Radio, but I’m referring to true streaming, subscription-based. Look around you: what percentage of the techies you know actually buy individual song files for 99 cents a piece (or more) versus those who subscribe to an all-you-can-eat streaming music service for as little as ten bucks per month – which is less than a brand new album release on iTunes?
According to Billboard, Apple has opened “exploratory talks” with senior label executives about the possibility of launching an on-demand streaming service that would rival Spotify and Beats Music.
At any rate, the time is nigh for an on-demand music service from Apple.
I know, Steve Jobs said in 2007 that “people want to own their music” and while ownership worked for most people back then, people’s tastes change and it’s 2014 now.
Nowadays, Spotify’s rise is unfolding before our own eyes while iTunes in the United states at the same time is facing a double-digit decline as more and more people figure out they don’t really need to own their music files.
Some watchers speculate it won’t be long before a true iTunes streaming music thingy rolls out and I’m with them.
Apple’s summer developer event kicks off with a keynote on June 2, 2014 so perhaps the company will announce an iTunes branded music subscription service during the five-day conference.
Apple could tease it even earlier as its SVP of online services boss, Eddy Cue, is scheduled to headline the second night of Recode’s Code Conference in May, along with his peer – SVP Craig Federighi who heads all of Apple’s Software Engineering.
Wrapping up, let me remind you that Spotify has a fairly decent and free iPhone and iPad app in the App Store, which has been revamped recently with a darker appearance while picking up new features like Repeat One and Your Music.
I want to know your feelings on the topic so please extend this opinion by chiming in with your $0.02 down in the comments.