Billboard has a lengthy piece on how the decline in download revenues in the US and the lukewarm reception of iTunes Radio has spooked Apple and spun the company into something of a crisis. So much so that it is considering the “most dramatic overhaul of its iTunes music store in more than a decade”.
The piece is full of quotes from anonymous insiders and Apple has refused to comment but, despite that, it is a fascinating read and hints at all manner of future directions for Apple and music (which is perhaps part of the problem as an overwhelming number of choices are seemingly fuelling the company’s indecision here).
The headline stats from the piece are that iTunes Radio is not driving significant click-through sales of tracks – Billboard sources says only 1-2% of users are clicking the buy buttons – and that Apple’s contribution to labels’ digital revenue has slipped from 70% two years ago to 50% today (as other platforms grow and the US download market hits the wall).
“iTunes Radio hasn’t solved the problem of refreshing the iTunes store,” is what one senior label executive is quoted as saying. “While listeners are clicking the buy buttons, the traffic it is driving is in the low single digits of listeners.”
It’s not all bad news for iTunes Radio, however, with some sources seeing a wider picture where, even if it has had a poor start in the US, it could still have a significant part to play in markets like Russia and Brazil when it gets a proper international roll out.
The feature does crank up the sense of panic enveloping Apple over this as it tries to build a future strategy and retain its preeminence in the digital music space. The two biggest issues it seems to be prevaricating over are: bringing iTunes to the Android platform (especially as it loses ground to Google’s mobile OS); and the launch of iTunes as a full on-demand streaming service (something the late Steve Jobs famously said the company would do when “Hell froze over”).
“The à la carte consumption model is 11 years old and at this point the decline in the US download sales seems unstoppable; it doesn’t seem like the store is refreshable,” said one label source, adding that iTunes going into on-demand streaming was a question of “when” rather than “if”.
The feature paints a picture of a company in a deep institutional and strategic panic about the future. But, given Apple’s internal secrecy about what it is up to and its track record, it will be a brave, brash or foolish person who writes off its centrality to digital music just yet.