WSJ Reports iTunes Saw 13-14% Drop In Music Sales, Expects Beats Music Will Be Folded Into iTunes

What Will Apple Do To Boost iTunes?

The music industry continues to evolve, but some bad news is reported by THE WALL STREET JOURNAL, which writes, "the growing availability of cheap music -- from free videos and streams to $10-a-month unlimited subscription plans -- is sapping demand for digital downloads at the world’s biggest seller of music, APPLE INC. Music sales at APPLE’s iTUNES STORE have fallen 13% to 14% worldwide since the start of the year, according to people familiar with the matter. The decline is stark compared with a much shallower dip last year. Global revenue from downloads fell 2.1% in 2013, according to the INTERNATIONAL FEDERATION OF THE PHONOGRAPHIC INDUSTRY."

Many industry insiders blame the change in how listeners get their music. Rather than own a CD or download and pay for a music file, many are listening to webcasters such as PANDORA, or subscribing to streaming services such as SPOTIFY.

Those offerings, and "the plummeting download numbers help illustrate why APPLE bought the $10-a-month subscription streaming service BEATS MUSIC earlier this year, as part of its $3 billion acquisition that included headphone maker BEATS ELECTRONICS, notes THE JOURNAL. "APPLE is rebuilding BEATS MUSIC and plans to relaunch it next year as part of iTUNES, according to a person familiar with the matter.

All this scares some record company executives. The business has been stable as of late, slowly recovering from the effects of illegally downloaded music. The report says music execs, "worry their industry could lurch back into decline after several years of relative stability, should download sales decline faster than streaming growth accelerates. A key part of that equation, executives say, is persuading enough users of online music services to pay a monthly subscription fee, usually $10 a month, rather than stick with free versions that carry advertising and generate much less revenue for record labels. SPOTIFY offers such a free, ad-supported option; BEATS MUSIC doesn't."

What APPLE eventually does to become a player in this new streaming world will play out soon to offset the loss in music sales on iTUNES. THE JOURNAL adds, "despite the slowing U.S. music sales, APPLE reported this week that global iTUNES sales -- including movies, apps and books -- increased to $4.6 billion in the third quarter, up from $4.3 billion in the same quarter a year ago. APPLE didn’t break out figures for music sales."

$5 Streaming?

THE NEW YORK POST adds JIMMY IOVINE has a vision for APPLE that would offer streaming music at a low price. "As part of its vision for a revamped BEATS, APPLE is seeking to slash the $10-per-month price to $5 in hopes of spurring widespread adoption. It’s also pitching the idea of a $12 a-month “family plan,” notes THE POST.

The report adds, "IOVINE -- like other long-time recording execs -- is no fan of SPOTIFY, PANDORA and other free ad-supported services that dominate the industry. While they are fast-growing, the money they generate for the labels is still a trickle. Although he’s not APPLE’s official pointman on the talks with labels, IOVINE believes the industry should push cheaper monthly subscriptions and move away from the ad-supported model."

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