Apple is Not Interested in Music Streaming 'for the Money'

By Gary Kim June 06, 2013

Global revenues from mobile streamed music services are expected to rise by more than 40 percent to $1.7 billion, according to Juniper Research. For the first time, these revenues will thereby overtake those generated by full-track downloads to mobile devices.

But that probably is not the reason Apple is rumored to be getting into the streaming music business, something Apple has in the past deemed less desirable than downloading.

True, streaming is where the growth is. Digital music revenues are forecast to finally exceed physical media sales globally sometime as early as 2015, driven by strong growth from streaming services such as Pandora and Spotify, according to Strategy Analytics.        

And streaming activity is growing between 28 and 48 percent annually, Strategy Analytics has said.

But the business of “renting” music, rather than “owning” it, now looks to become a more-important part of the value of buying a device, and that is something Apple cares about quite a lot.

In the past, Apple might not have thought music streaming contributed much to device value. But that seems to be changing.

In fact, the key (Apple) U.S. market likely will in 2013 become the leading global market for streaming music services.

“Historically, companies such as Apple, Google and Amazon have primarily focused on cloud music from a storage perspective; as a remote locker for downloaded tracks,” said Dr. Windsor Holden, Strategy Analytics analyst.

But that seems to be changing. While iTunes still accounts for the vast majority of paid downloads, with 63 percent of the market in the fourth quarter of 2012, according to NPD, the music listening business is moving in the direction of streaming.

NPD found that nearly 25 percent of users 13 to 35 listened to music through Internet radio services in the fourth quarter of 2012, up from 17 percent the previous year.

Also, Pandora is the second most popular free iPhone app of all time, suggesting the potential importance of a branded and integrated music streaming experience for iOS devices.

But revenue, per se, is not Apple’s motivation.

Edited by Alisen Downey

Contributing Editor

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