iTunes numbers looked solid, if not outright impressive, when Apple reported fourth-quarter earnings this week. Sales were up from $4.3 billion to $4.6 billion year-over-year. But Apple doesn’t break out music purchases from those numbers, so it’s difficult to tell what accounts for all that money. But now we know: It’s not music.
Music purchases from iTunes are sliding: They’re down more than 13 percent worldwide since January, the Wall Street Journal reported Friday. In the U.S., downloads have dropped 12 percent this year. The culprit is streaming music services, and Apple isn’t the only company affected. The music industry as a whole saw a 2.1 percent decline in downloads, the WSJ report noted—a drop that would’ve been more severe if not for the increase in streaming subscription revenue.
But Apple already has a strategy to deal with the download drop, if rumors of a revamped Beats Music streaming service prove true. According to the WSJ, Apple’s overhauled music app will be integrated with iTunes, which already has name recognition and a long history of established music partnerships. And the company is reportedly wheeling and dealing with record companies to push subscription prices down to $5 a month, compared to the going rate of $9.99 a month that Spotify and Rdio charge for premium service.
Spotify recently introduced a $14.99 family plan that brings subscriptions down to $7.50 a person. Apple’s overhauled streaming service will be the underdog in the battle for your earbuds, and if the company can compete on price and catalog, it might give Spotify a run for its money.
This story, "Apple’s slipping iTunes sales prove streaming is the future" was originally published by Macworld.