For Apple Music to succeed, iTunes download sales must be sacrificed

“One of the business tenets that has led to Apple’s incredible success is that the company isn’t afraid to cannibalize its own products,” Yoni Heisler writes for BGR. “If anything, Apple tends to embrace such scenarios, with Tim Cook once explaining that Apple views ‘cannibalization as a huge opportunity.'”

“With that said, one can only hope that Apple will take steps to actively cannibalize its own iTunes business,” Heisler writes. “If they don’t, some other company will, and it may happen sooner than anyone thinks.”

“The writing on the wall couldn’t be any clearer: streaming music, whether it be ad-supported or via a monthly subscription service, is how most people prefer to listen to music. Steve Jobs’ old adage about how consumers prefer to own their music simply isn’t true anymore,” Heisler writes. “Apple, of course, isn’t oblivious to this phenomenon. After all, the company did buy Beats for $3 billion last year and has plans to introduce a revamped streaming service dubbed Apple Music next week at WWDC. That’s all well and good, but if Apple wants to remain relevant in the music business, it will have to actively try and cannibalize an iTunes business that has performed dutifully for over 12 years now.”

Read more in the full article here.

MacDailyNews Take: Obviously, Apple Music will take download sales off the table, but the idea of owning music isn’t going to go away for certain people, and older demographic, to be sure, but also a more affluent one. That said: $120 per year is roughly 100 tracks purchased per year (roughly 8 albums per year). Buy 100 tracks or 8 albums per year or have access to everything for the same price? When presented like that, a lot of people are going to sign up for Apple Music.

SEE ALSO:

Apple’s all-in bet to be watershed moment for music; $10/month unlimited subscription service and more – June 1, 2015
Apple in talks to sign Drake, Pharrell Williams, and David Guetta as iTunes Radio DJs – June 1, 2015
Kanye West’s long-delayed album release may be connected to Apple Music’s launch – May 21, 2015
Apple’s music streaming service to have Ping-like social network for artists – May 14, 2015
Apple’s new streaming music service to offer free song sampling, free trial, other free features – May 8, 2015

27 Comments

  1. I pay for a Spotify subscription and absolutely love it. Apple is going to have to convince me to sign up for their service. It is a bit worrisome that Apple is so late to this game. Usually Apple is better at spotting these trends. Buying Beats to get into this game is almost Microsoftian. Spending lots of money for a, “me too” service is not a typical Apple approach. Apple buys small startups and innovates to take on a new market segment. I realize Apple is not new to music, but it is new to subscription music. I am keeping my fingers crossed on this one. I am being optimistic and hoping that, while Microsoftian in the initial purchase of Beats, they add their innovation to it and make something really spectacular. I don’t want to see Apple do with Beats what Microsoft did with Skype, just so they can say they are in the streaming music game.

    1. “Microsoftian” is so 90’s… today the term is Googlish. Google has outpaced even the Microsoft of the 90’s when it comes to purchasing companies. Furthermore, Microsoft mostly bought up companies to squash competition, not to advance their own offerings.

      Apple had their own subscription service, iTunes Radio, before the Beats acquisition and bought Beats for several reasons that had nothing to do with “me too”. Beats had a unique curation method along with a fairly popular brand. iTunes Radio didn’t work as well, because it was initially based off the technology used by their iTunes “Genius” feature.

      1. First, he gave a perfect example of a recent “Microsoftian” purchase, with Skype.

        Second, iTunes Radio is nothing like Beats or Spotify, so yes, it was indeed a “me too” acquisition.

        Stop trolling and think before you speak.

  2. i can buy classical music cds on amazon and rip them with aac lossless on my shared drive and then with some compression on my laptop. also can buy used cds of popular music and then rip them. subscription is good for me to find artists i didn’t know about, especially jazz, ragtime, swing, big band, etc. and then i buy cds of their music. this might make me old-fashioned. we have lots and lots of real books too. anyway, i wouldn’t miss it if itunes stopped selling downloads. we decided a while ago, for us at least, it was cheaper and more convenient to buy used cds.

    1. @el Tritoma. I’m right there with you, my listening is primarily classical music, with a bit of jazz. A lot of what I want to hear isn’t on subscription services, and I really doubt that’s going to change much. I’m happy to buy and rip CDs of what I want.

      Apple’s certainly welcome to drop download sales if they wish–it won’t affect me. But they’d sure better keep the ability to rip CDs and import files from other sources.

  3. I am older, and yes I won’t pay $120 every year to listen to music. If there is something I like, I will buy it. Steve said people want to own their music, not rent it. I think he would still say the same. If older people opt out and younger people only want it for free, who is the market? I may be proven wrong, but I just still don’t get it…

    1. I think you hit it on the head. I like the idea of owning my music, but i think the younger generation doesn’t share that view. They are willing to rent music (and based on popular music, I wound’t own some of these bands either). The market will show (it already did with spotify to an extent) that 18-24 yo’s are willing to pay a monthly fee to hear anything they want.

  4. I want my music on my phone. I buy music I like, to listen over and over. I want to be able to listen even when I’m travelling in areas of poor coverage. And I always want to listen to my music without having to keep an eye on my monthly data allowance.
    iTunes and the unbundling of CDs into individual tracks was a genius move.

  5. Looks like I’ll have to make my occasional music purchases elsewhere then. Pity, I’d prefer to buy from the company I have a few shares in rather than Amazon.

  6. So what if Apple has to make a sacrifice of the classic iTunes Music model. It’s not as though Apple doesn’t have any other source of revenue. It’s not Apple’s way, but the company can certainly afford to take some losses.

    Supposedly, iTunes Music was always a break-even venture. I just don’t know why the media makes such a big deal out of Apple’s decreasing music download sales. If times have changed, then Apple needs to change with them. Apple is still leading in music download sales but maybe this streaming music is just a temporary thing. Apple can afford to do whatever it needs to keep iTunes Music relevant. I can’t believe Apple won’t be able to compete against Spotify if Apple really wants to. The news media is always talking as if Apple is going to suffer some major blow whenever it runs up against some minor obstacle. I think Apple will be able to find some way to make its service somewhat unique to justify paying for. At least it will try. Isn’t Apple’s music catalog larger than Spotify’s music catalog? I like Spotify because I always have the opportunity to listen to the latest albums if I want to, which I consider an excellent deal for those who like to hear the latest music available.

  7. It’s clear what should happen. Make the streaming 256kbps standard streams and then make the iTunes Store CD quality or perhaps HD quality. Then there is a value added aspect to purchasing musing for those who care about sound quality with higher quality kit.

    The killer feature is to make all your music purchased to say upgradable to this CD quality. Then those who have a few grands worth of music already purchased don’t feel like they have wasted their money over the years.

    1. you make a very good point about the economics of upgrading. i did the math a while ago for the several thousand itunes songs i bought way back when, and it has been cheaper to buy entire used cds even when there are only a couple songs on there from itunes. and then i sometimes find some other songs on the cd that i end up liking. and when it comes to upgrading or replacing all the songs on a cd there is no comparison it is just better to buy the cd, even new sometimes.

  8. The writing on the wall couldn’t be any clearer: streaming music, whether it be ad-supported or via a monthly subscription service, is how most people prefer to listen to music.

    I, for one, entirely DISAGREE. But there’s a big chunk of the current youth culture that’s used to getting their tunes ‘for free’ and rental streaming accounts are one way to get them. But as usual, I’ll point out that these accounts are also one way to RIP them and keep them. This is not the intended use of rental stream accounts. The whole concept is a mess IMHO.

    As for ‘Internet radio’, THAT I like. It’s the only way to discover new music, now that terrestrial radio is almost 100% worthless corporate programmed crap. There are, thankfully, a few scattered exceptions. But I listen to those exceptions over the Internet!

    1. Here in Boston broadcast radio is fantastic. That said I do listen to some Internet radio especially genre stations. That said, what I most often do is go to the library, get the CDs I want, and then rip them into my iTunes. There’s no way a streaming Service will let me populate my iTunes library. This means I will probably never use streaming service for anything.

  9. I’m afraid I still agree with Jobs on this one:

    “”The subscription model of buying music is bankrupt. I think you could make available the Second Coming in a subscription model and it might not be successful.”
    — Rolling Stone, Dec. 3, 2003

    1. Waaaay out of context. And Jobs was absolutely correct when it was said. That’s EXACTLY why iTunes became so popular. Subscription services weren’t “radio” stations. They were music stores that allowed you to rent music.

      Streaming services today offer a different experience that doesn’t take the tedious task of looking through millions of songs and picking the ones you want to hear… Instead you pick a genre and music is automatically picked and played for you. It’s about creating a stationed tailored to your tastes.

      1. I don’t think the quote is out of context, Jobs was pretty adamant about people NOT wanting to rent music and I don’t see anything new about changing the term “rental” to subscription.

        I’m hoping that Apple has something RADICALLY new to unveil, but so far, EVERY rental or subscription or streaming service known to mankind has either flopped or on artificial life-support. In spite of all the hype you see in the media, none of them are making real money for anyone–themselves, the publishers or the artists.

        And consider this: if subscription music is so desirable, then why did XM Satellite radio have to sell out to Sirius? There has never been a big market for pay-per-listen radio.

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