Apple Inc. (NASDAQ:AAPL) has been experienced declining music sales in the wake of free videos and cheap music. Music sales at Apple’s Tunes have dropped 13% to 14% across the globe since the start of the year, according to The Wall Street Journal, which cites sources familiar with the matter.
Could Beats help Apple?
Sales this year have declined more when compared to last year. Global revenue from downloads declined 2.1% in 2013, according to the International Federation of the Phonographic Industry.
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Apple Inc.’s decision to acquire Beats Music for $3 billion seems reasonable after witnessing the declining download numbers. After the acquisition, now the iPhone maker is making some changes in Beats Music, re-launching the service as part of iTunes next year, says the report.
There are some companies that are now worried that the whole industry will see a downfall after seeing good business for a number of years if download sales drop faster than streaming growth increases. According to experts, one of the major factors is retaining more users to pay monthly subscription fees for online music services, which are around $10 per month, and switch from the free versions that show advertisements and generate much less revenue for record labels. One such service is offered by Spotify AB, but Beats Music does not offer one.
CD sales have also declined over a decade, and overall music sales around the world were stable last year. However, in Japan, there was a sharp decline in physical and digital sales. Worldwide revenue from recorded music came to $15 billion in 2013. In the United States, recorded music sales are down approximately 50% since their peak in 2000 and have remained flat over the past few years.
The current year drop in worldwide iTunes music sales also reflects domestic performance. In the United States, Apple Inc.’s revenue from downloads of singles and albums dropped 11% and 14% respectively in the first half of 2014, according to the Recording Industry Association of America. However, a rise of 28% in revenue from streaming music services supported the overall digital revenue increase marginally to $2.2 billion in the first six months of the year.