iTunes music sales dipped sharply since start of 2014 as iPod turned 13 yesterday

iTunes Beta (Music)

If you need another proof that Apple made the right move dropping more than three billion bucks on Beats’s audio accessories and music-streaming service, here’s one.

According to people familiar with the matter who spoke to the Wall Street Journal on Friday, the decline of digital music sales on iTunes is accelerating with latest data showing between a thirteen and fourteen percent dip globally since the start of this year.

By comparison, the International Federation of the Phonographic Industry estimated that global revenue from music downloads fell just 2.1 percent in 2013. Clearly this development doesn’t bode well for iTunes, but can Apple do anything about it? Read on for the full reveal.

The digital music revolution that started more than a decade ago with the introduction of the iPod music player, which turned 13 yesterday, and the iTunes Music Store, hasn’t slowed down. What’s changing are consumers’  music listening habits.

For example, the aforementioned 2.1 percent dip in 2013 was successfully offset by the revenue increases stemming from ad-supported and subscription-based streaming services from the likes of Rdio, Spotify and many other.

Check out the very first iPod commercial, unveiled by Steve Jobs during Apple’s 2001 media event that saw the landmark introduction of the standalone music player.

Worldwide revenue from recorded music totaled $15 billion in 2013. In the United States alone, the world’s largest market for music, recorded music sales are now nearly fifty percent below their peak in 2000. Sales of music downloads in the U.S. fell an RIAA-estimated twelve percent in the first half of 2014. During the same period, revenue from paid subscription services surged a cool 23 percent.


Nielsen SoundScan data shows that fewer consumers are buying albums, contributing to the eleven percent decline in sales of the format. Nielsen SoundScan also recorded a thirteen percent dip in U.S. digital track sales this year.

The iPhone maker has for a long time resisted launching an iTunes-branded streaming service that would allow customers to listen to any song from Apple’s catalog of tens of millions of tracks, in any order and without limitations, for a couple of bucks per month.

Apple and labels’ hesitance has created new opportunities for services such as Spotify, which makes low-cost music a reality in exchange for a monthly subscription fee of just $9.99 per month, or less than the price of a brand new album release on iTunes.

But Apple is not standing still.

Beats Music (Windows Phone, Android, iOS 001)

“Apple is rebuilding Beats Music and plans to relaunch it next year as part of iTunes, according to a person familiar with the matter,” added the report.

Beats Music, a free download for the iPhone and iPad, currently requires users to pay a subscription fee of ten bucks per month for unlimited streaming of tens of millions of songs from its catalog.

But if Re/code’s Peter Kafka is correct, Apple may be able to negotiate a discount with the labels that would see users paying half the price in the near future.

A rebranded Beats Music service could be unveiled in February 2015.

Which streaming service do you use and how do you get your music these days?

[The Wall Street Journal]