No More Free Downloads?
Rumors have it that Apple is aggressively scheduling a phase-out of music downloads from the iTunes Store, and has supposedly been in planning for the past two years. Although, the company denies such an idea. It is also expected that the phase-out would take two years to complete. Plummeting download sales may be creating pressure to make such a plan reality.
Apple has denied that this plan even exists. However, sources within the company have insisted that the plan not only exists but is active and on schedule. Sources have insisted on remaining confidential, and have purposely avoided using corporate email accounts and phone numbers out of fear of corporate monitoring.
According to inside sources, the timetable is to completely phase-out iTunes music downloads by 2019, shortly after the start of the New Year. This gives the company two more holiday seasons to collect revenue from music downloads. It would also minimize disruptions among buyers, as the beginning of the new year is a slow period of sales.
Transition to Apple Music
The phase-out strategy will include a transition towards Apple Music, the company’s streaming platform. The company would migrate a user’s iTunes download collection into a brand-new Apple Music account. Customers would then receive a three-month transitionary trial account. Additionally, the company would migrate their entire music collection to streaming equivalents.
Apple would preserve all of their previous playlists and details. Downloads unavailable as streams would be grayed out, pending future licensing deals. Over time, as more music gets licensed, customers would regain access to grayed-out portions of their collection. The key difference is that users will not have the option to purchase or download music from the iTunes Store.
Data may be driving the move. According to details shared by Nielsen, paid downloads are rapidly decreasing in 2017. During the first six months of the year, track downloads decreased by 24.1% in the US, while digital album purchases slipped 19.9%. Both formats are likely to drop an additional 30% or more in 2018. This would eventually make music-download revenue negligible.
iTunes ‘Bloatware’ Concerns
Apple engineers have expressed frustration with iTunes. They have complained that the servers are overloaded and described the platform as a “big mess”, pointing out problems with bloatware affecting the customer experience. Pulling out lower-performing formats, especially music downloads, will help to solve the issue.
Spotify is another contributing factor to the phase-out. Despite numerous advantages, Apple Music remains heavily behind Spotify in popularity. Spotify’s subscription-base doubles that of Apple Music. Just recently, Spotify reported a user-base of 140 million active users.
With that said, Apple Music is available in 59 countries of which Spotify is not.
Separately, Spotify is moving towards a high-profile Wall Street entry. It completely overshadows Apple Music’s ambitious efforts to overtake streaming.
Apple Music chief Jimmy Lovine has discredited Spotify’s success, pointing out the company’s business model and vulnerability.
If tomorrow morning… Amazon says, ‘Why don’t we try $7.99 for music?’ Woah, guess what happens?
The streaming business is not a great business. It’s fine with the big companies: Amazon, Apple, Google… Of course it’s a small piece of their business, very cool, but Spotify is the only standalone, right? So they have to figure out a way to show the road to making this a real business.
This does not take into account the discounts Amazon already applies to Amazon Music prices. In fact, Amazon’s Prime-bundled streaming music plan is effectively free, yet Spotify clearly remains the market leader.
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