Neil Hughes
The latest data from Nielsen shows that sales of digital albums are down 11.6 percent, while purchases of individual tracks are down 13 percent, as on-demand streaming audio has surged 50.1 percent, helping to provide some insight into why Apple purchased Beats Music.
Nielsen SoundScan measures music sales while Nielsen BDS tracks music streams. Both on Friday revealed that overall album sales, including physical and digital media, are down 14.9 percent in the first six months of 2014, with digital album sales down 11.6 percent.
While sales of albums through services like iTunes have declined, users have embraced streaming services. Total on-demand media is up 42 percent, with audio accounting for the most — 50.1 percent. Video on-demand was up 35.2 percent in the first six months of the year.
One segment of the physical media market is growing, however, as sales of vinyl increased 40.4 percent to 4 million units. That was up from 2.9 million units sold in the first six months of 2013.
The latest data showing the growth of streaming audio comes after Apple paid $500 million for Beats Music, an on-demand subscription service started by headphone maker Beats. Apple paid another $2.5 billion for the company's headphone division in an acquisition that Jimmy Iovine and Dr. Dre as employees.
Apple made it clear that the acquisition of Beats Music was key to its blockbuster $3 billion deal, as the company intends for it to complement its existing iTunes offerings. Apple already offers its own iTunes Radio service, but that relies on a series of randomized "stations" rather than allowing users to select their own tracks on demand.
Apple said it plans to keep the subscription Beats Music service intact, alongside the existing iTunes Radio free streaming, and song purchasing through the iTunes Store. The company emphasized that the deal will make its music lineup "even better," in the words of iTunes and online services chief Eddy Cue.
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Wesley Hilliard
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29 Comments
I know I personally am buying a lot less and streaming Spotify a lot more. Then again, most of the music I listen to I have owned for years, much of which is on Spotify.
Dunno what the future holds for all this. I'll look into Beats Music once Apple gives me a reason to. Pretty happy with Spotify.
I spend a lot of time on Spotify and iTunes Radio. I have a large music library but it doesn't come close to Spotify. Just their new releases alone could take days and days to listen to. I'll always have my own music library but streaming services are hard to beat. There's definitely room in this world for both business models and I think they could work to serve each other. Streaming services are great for discovery of artists I've never heard of. Apple should easily be able to offer a decent streaming service with all its catalogs. That's an awful lot of content Apple could get on its devices. But the fact that you can't listen to whole albums in iTunes Radio really sucks and that's where Spotify excels.
Steve Jobs had said that people really want to own music and that may be true but there are people who simply want to listen to lots of various types of music that they might not want to actually own. Apple should address the needs of both in order to stay competitive. Apple's got plenty of money from selling hardware, so what's the big deal of losing some money on content.
Steve Jobs had said that people really want to own music...
Just an fyi... Steve passed away going on almost 3 years now.
Steve Jobs had said that people really want to own music and that may be true but there are people who simply want to listen to lots of various types of music that they might not want to actually own.
It's interesting that you mention that. While I was reading the article I was thinking, "I prefer to buy songs and have them in my own library."
That got me wondering WHY I prefer that? What's the advantage? Sure, I'm not dependent on a subscription for access and I can play music in places where there's no internet access (most notably the subway), but beyond that, I'm not sure I understand my own desire to "own" my own music library. Even if I never listened to even one track beyond what I'd hear in my own library, why not use a service that eliminates the headaches I have now with sync across machines and updating the iTunes library on each of them?
Before I got rid of my car I would hear a song I liked on the radio and later buy it on iTunes. Lately I've noticed that not having that car radio means I'm no longer hearing what's new and popular. Am I missing out on stuff I would enjoy? A streaming service would both provide a replacement for that "exposure mechanism" AND eliminate the need to remember what it's called so I can buy it later.
Maybe I should look into streaming...
All of the streaming is being done on Spotify, which is a phenomenal service for the consumer and artist. It is so good for the Artists that it's actually hemorrhaging money with its royalty payments. They lose about 100 million dollars a year because most of their users just take advantage of their free service. This guy explains it better than I can. http://www.sturbridgesound.com/blog/new-data-from-soundscan-and-what-it-means-for-musicians