End of iTunes downloads “not an if, but when”
Revenues from streaming music have overtaken revenues from download purchases. And it took so little time for that to happen.
In 2012, Apple made $3.9 billion in revenue from iTunes music downloads, the most it’s ever made from them. Since then, download numbers have fallen off: a 16 percent drop-off last year, maybe 25 to 30 percent this year. The tumble could end up with Apple reaping only $600 million from downloads in 2019.
The numbers are part of the conversation Apple executives are said to be having about not if, but when iTunes should stop offering downloads. Sources inside Infinite Loop have told Digital Music News that plans are contingent on managing how smaller markets that haven’t taken up streaming would be affected and from record labels’ likely negative reaction to the loss of a revenue stream.
Even as analysts expect Apple Music to garner 20 million total subscribers by the end of this year, phasing out old ways of doing business takes time. The talk right now is to “ride [downloads] out for the next 3-4 years, maybe longer.” 2020 would also be the year that Apple Music revenue is forecast to nearly match iTunes downloads revenue of 2012.
One source said that the downloads phase-out plan would be staggered with heavy-streaming countries seeing the shutdown first, followed by other countries split into two further tiers. In patching things up with labels, having Jimmy Iovine, who co-founded the Universal Music Group-owned Interscope Records, on Apple’s side will definitely help negotiations come the time to have them.
What’s plaguing the minds of people at the table, though, is former Apple CEO Steve Jobs. One source said that “if he were alive, Jobs would have killed [downloads]”. Instead, current head Tim Cook has kept the downloads going while simultaneously offering the Apple Music service. Promotions for iTunes and Apple Music have often overlapped and have confused users as the nature of the two payment structures would mean that streaming subscribers would have to pay extra to download and own music.
It’s these pressures that are forging an ultimate path for Apple to take in doing away with the download. The company did not respond to requests for comment.