Spotify seems to have surpassed iTunes in Europe where royalty payments from the popular streaming-music service is now earning artists more revenue than Apple’s stagnant music store, which to this date continues to sell music downloads and does not offer all-you-can-eat subscriptions.
At least that’s the key takeaway from a survey conducted by Kobalt Music Publishing, which collects royalties on behalf of 6,000 songwriters and music makers in Europe.
According to the data cited Wednesday by The Wall Street Journal, Spotify in Europe brought artists an average of thirteen percent more revenue versus iTunes during the first quarter of 2014.
The data seems to corroborate recent findings by the Recording Industry Association of America which found that digital music sales on iTunes dropped between thirteen and fourteen percent globally since the start of this year, with Apple officially confirming the drop in its SEC filing.
To put this into perspective, Cobalt said iTunes in the third quarter of 2013 earned songwriters in Europe 32 percent more from music downloads versus Spotify.
Three months later, iTunes’s lead narrowed as Apple’s music store earned artists in Europe just eight percent more than Spotify, only to be overtaken by the Swedish music service in the first quarter of 2014.
What a difference a few months make!
The data should be taken with a grain of salt because Kobalt is but one of the many companies that represent songwriters and music makers. Over in the United States, Kobalt’s songwriters are still making more from iTunes sales than they do from Spotify, the company said.
It’s not just Spotify as YouTube has also contributed to an increase in terms of size and revenue of digital music sales, Kobalt said.
What we do know for a fact is that sales of individual tracks and whole albums are on the decline on iTunes. As per Apple’s own SEC filing, growth in net sales from the iTunes Store driven by the 36 percent annual increase in app revenues was “partially offset by a decline in sales of digital music”.
It’s interesting that digital music sales are rising in every other top market, except in Japan where digital music revenues went from nearly $1 billion in 2009 to just $400 million last year, according to the Recording Industry Association of Japan.
That’s because folks in Japan love the CD format: according to The New York Times last moth, CD sales account for about 85 percent of music sales in Japan. In Sweden, where Spotify has its headquarters, CD sales comprise only 20 percent of music sales.
Apple of course has the most accurate data on iTunes sales and has admittedly been aware of consumers’ changing habits for quite some time now — that’s why it purchased Beats Electronics’ headphones and audio accessories as well as the Beats Music subscription-based music service in a transaction valued at $3 billion, its largest acquisition to date.
“Apple is rebuilding Beats Music and plans to relaunch it next year as part of iTunes, according to a person familiar with the matter,” The Wall Streeet Journal recently said. The iPhone maker is reportedly negotiating a discount with the labels that would see Beats Music subscribers paying half the price in the future.