Music Streaming And The (Possible) Death Of iTunes

In this guest post, esteemed Aussie scribe John Birmingham casts a keen eye over music streaming services and suggests, for many, the future looks bleak…

Subscription services have replaced downloads in the US as the largest revenue source for the music industry. Apple Music hasn’t quite cannibalised iTunes yet, but the trend line is indisputable. The Recording Industry Association of America has just dropped figures for 2015, and the biggest profit centres for music companies were paid streaming services or ad-supported platforms such as YouTube or Spotify’s free tier.

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Fortune reports that streaming delivered 34.3 per cent of US music industry revenue, at $US2.4 billion. Digital downloads — which mostly means iTunes — dropped from utter dominance to squeak into second place at 34 per cent of sales. Physical formats made up the rest of the pie.

Digging in deep, however, throws up some curious finds. Not all streaming services are created equal. YouTube is far and away the most popular delivery channel for streamed music, especially among the younger demographics. But the ’Tube is ad-supported. A recent foray into a paid subscription service has not delivered many paying punters.

The paltry returns from the ad-based channel can be seen in the greater sum earned by sales of vinyl. Old school platters have enjoyed something of a hipster-led revival, paying out $US416 million in the last year — appreciably more than Spotify or YouTube ads, which coughed up less than $US400 million for the whole sector.

As the money moves to subscriptions, the industry faces another shakeout. Indeed, shakeout seems to be the default condition for the music biz. The much-admired, technically elegant Rdio shut up shop at the start of the year, following Sony’s paid streaming service into oblivion. Apple bought Beats Music (and headphone business) to provide the core of its subscription service. Industry veterans like Pandora and Deezer are casting about for capital, partners or simple lifelines to stay afloat.

The most likely future for streaming music is as a perk — a low cost offering, possibly subsidised, by the tech giants as an enticement into their wider ecologies. Apple, Google and Amazon all have bets on in this race.

The most likely future for artists is playing live gigs for beer money.

This article originally appeared on B&T’s sister business site www.which-50.com

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