Sources: Apple mulling Spotify-like streaming service

Declining iTunes sales could lead Apple to explore different models to generate revenue from its digital music business.
By Ananth Baliga  |  March 24, 2014 at 1:32 PM
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CUPERTINO, Calif., March 24 (UPI) -- Apple, according to unnamed sources, is considering launching a subscription based music streaming service, on account of declining music sales on iTunes.

Senior executives at Apple have started exploratory talks to launch an on-demand service that would make all the music on its iTunes service accessible to subscribers. This would be different from iTunes Radio, where users don't have control over the music they are listening to, much like Pandora or any other radio station.

Apple is also mulling iTunes for Android phones as well -- phones running Google's operating system have been showing faster growth than Apple's iPhone. These discussions come after data suggests Apple is seeing a double-digit drop in music downloads from the iTunes Music Store, one of the largest music retailers.

The new plans, contrary to Steve Jobs' argument that users will not pay subscription fees for music, will be widely observed by music labels. The opening up of iTunes, beyond Apple users, and an iTunes App for Android mark big changes in the company's digital music strategy.

According to Nielsen SoundScan, sales of digital albums in the U.S. are reportedly down 13 percent and digital track sales are down 11 percent this year.

This coincides with a boost in revenues for digital music streaming services like Spotify, Pandora and YouTube. The three of them generated a combined $1.4 billion in subscription, advertising and licensing revenues in the U.S. last year, up 39 percent from 2012.

Currently, Apple's iTunes Store accounts for more than 40 percent of recorded music revenues in the U.S. and any changes to its business model will be closely watched and will have a domino effect on other participants in the industry.

"So when you buy a song for $1.29, and you put it in your library, iTunes might send an e-mail pointing out that for a total of, say, $8 a month you can access that song plus all the music in the iTunes store. It's all in the 'what if' stage," said a source at a major music label.


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