First, digital music sales are going down. That impacts iTunes. Second, streaming music services in various forms are on the increase. That impacts iTunes. Is streaming music and music subscriptions the future? Or, is it just a fad?
Own. Rent. Free.
The old fashioned way to listen to music is to buy the music you listen to. That’s what made iTunes the world’s largest and most successful
online music store.
Many companies have tried to create music subscription services where you pay a monthly fee and can download and listen to all the music you want.
In between there are free services which let you listen to selected music but advertising comes along for the ride.
Think of the issues and choices here as Own, Rent, or Free. Ownership is not growing, but is highly profitable for all parties.
Renting music in a subscription service is growing but isn’t profitable. Much the same is true of ad supported music services, or hybrids which offer a subscription for a price, but provide a free or trial version with ads.
After iTunes, the major players are numerous and include Spotify (10-million paying customers), Pandora (less than 5-million paying customers), as well as Google, Amazon, and others, most of which do not publicize their paying users, revenue or profits.
All of the subscription and free music services pale in number compared to the hundreds of millions of iTunes customers. But the trend is not going in Apple’s direction. Maybe that’s why Apple wants to buy Beats Electronics.
Future? Or, Fad?
Back to the beginning. Is owning your own music going away? Or, is streaming music and subscriptions the future? Or, a fad?
Up until Spotify I was on Apple’s side and preferred to own all of my music. A subscription music service has benefits, though; including a large library of music which can be streamed or downloaded to each device and played when necessary.
In this analysis, I lump streaming music and subscription services somewhat together, but where I see the future going is toward a huge mashup.
Alright, let me call it a hybrid, rather than a mashup, but you get the idea. Artists and record labels get more money for digital music sales than subscriptions or ad free streaming models. Spotify, like iTunes Radio, lets you listen and buy, which means the recording companies and artists are getting paid twice for the same music. Neither the ownership model nor the subscription models will go away. It’s a growing world with many customers.
With the purchase of Beats Electronics, Apple will hedge their bets. iTunes Radio vs. Pandora. Beats vs. Spotify. iTunes against the world. Everyone wins, but the future is a mashup of the past.