Katie Marsal
Apple's acquisition of streaming service Beats Music looms large over the latest music sales data, showing once again that the industry is trending away from sales of digital songs and albums.
Nielsen SoundScan this week revealed its year-end statistics for the music industry, spotlighting 54 percent growth in on-demand streams of audio and video music-related content. Total streams were up from 106 billion in 2013 to 164 billion in 2014.
The rise of streaming services comes as traditional digital album and song sales are on the decline. Sales of digital albums fell 9 percent in 2014 to 117.6 million, while songs dropped 12 percent to 1.26 billion.
Overall album sales, both physical and digital, saw a decline of 11 percent to 257 million.
In fact, the only album sales to grow in 2014 were vinyl, which surged 52 percent. With 9.2 million vinyl records sold last year, the legacy format accounted for more than 6 percent of all physical album sales.
Vinyl sales have increased year over year for the past nine consecutive years, and 2014 was the best year for vinyl since 1991, when Nielsen SoundScan first began tracking music sales.
"Digital music consumption continues its robust growth, with On-Demand streaming up 54% over last year and 164 billion song streams being played in 2014 ," says David Bakula, SVP Industry Insights, Nielsen Entertainment. "Although overall music sales are showing declines, Vinyl album sales were up 52% in 2014, shattering last year's record-setting total by more than 3 million LPs."
Nielsen's stats only underscore the importance of Apple's acquisition of Beats Music last May, which gave the iPhone maker an entrance into the booming subscription music service market. It's expected that Apple plans to use both iTunes and Beats Music to cater to different segments of the market.
Apple is expected to push Beats Music as a native iOS app starting with an update early this year. The change would help Apple better compete against leading streaming services like Spotify, which currently has a larger number of subscribers.
It's also been suggested that Apple could retire the Beats Music brand and instead label it under the company's iTunes umbrella, bringing it in line with other first-party offerings like the iTunes Store, iTunes Radio and iTunes Match.
Before it was owned by Apple, Beats Music got off to a slow start, with just 110,000 subscribers as of March. Its performance since being acquired by Apple remains unknown.
It's also been reported that Apple hopes to boost Beats Music subscriptions by cutting the price to just $5 per month. Apple is said to have pitched a proposal to music labels suggesting that a lower price point could grow music subscriptions considerably.
Currently, a subscription to Beats Music costs $9.99 per month, but if users are willing to sign up for a full year, it costs $99.99 for 12 months.
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68 Comments
It's been my contention since we heard about the Beats deal and it's still my contention that Apple didnt buy Beats so much as a way to get deeper into the world of streaming as it did to add another high-margin hardware product line. Apple has known for YEARS that streaming is not and likely never will be a big money maker. The economics just aren't there and never have been. So Apple thinks... who cares where you get your music? If downloads are going away, well we're darn sure going to milk them until they do, even if that means people will think we're behind the times. It's about profit and we're the ones making it! And so we're going to focus our energies on all the hardware used to play music. That means, iPhones replacing iPods, high-end earbuds and headphones replacing those free earbuds you get with your device, and maybe Bluetooth speakers, etc. That's where we're going to want to be and the Beats deal helps enormously to make that possible. Streaming? That's in the mix so that we can evolve sources of music that are exclusive to iPhones, etc, so we can sell more hardware to those who prefer music from the sources we provide. You just have to think in terms of the expansion of market potential that exists when a huge company with global distribution buys a small company that hasn't yet fully built out global distribution for its very popular products. It's a multiplying effect and that's what Apple is doing with the Beats hardware; the key component of why Apple wanted to own Beats. This article seems to suggest Apple sees iTunes Radio and Beats as a way to replace its declining download sales. But that just makes no sense. You see low-profit (or no-profit) streaming killing profitable downloads, so you decide to compete to get market share in the low/no profit streaming business? Makes no sense. No, you step back and say, if delivery of music is evolving from a nicely profitable model to a barely profitable model, maybe we need to think of some other means of making money from music, and that quickly leads you to all the types of hardware used to receive and play music. So that's where Apple is going.
The increase in streaming and decline in purchasing doesn't surprise me. What is interesting, to me, is the increase in sales of vynil. I wonder if people are buying the [URL=http://en.wikipedia.org/wiki/Gramophone_record#Vinyl_quality]180-220 grams[/URL] en masse(?)
Perhaps I'm old-school when it comes to music, but I refuse to have anything to do with streaming... I want to OWN the music I have, and have complete control over my library. I've purchased quite a bit of content from iTunes, the rest I've ripped into iTunes from my CD library, and subscribed to iTunes Match so I can enjoy the benefits of on-demand if needed on my iOS devices, and it has worked out very well for me. I keep backups of all my purchased iTunes content (which is all DRM-free), so even if it disappears from iTunes, I'll always retain my copy. The quality of the AAC files is sufficient for my needs / taste. These people using on-demand streaming services are part of a growing trend (IMHO) of the "I want it now, I refuse to wait for, or work towards, anything" generation that needs instant gratification in all things, and it's quite disheartening... :no:
“Something something, fuddy-duddy; something something, turning your back on “progress”…”
Oh, don’t mind me, just getting ahead of the replies.
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