iTunes Music Sales Dropping, iTunes Radio Adding Non-Music Content

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Lots of changes happening in the world of Apple audio content. iTunes Store sales have been declining for quite a while versus App Store sales and that discrepancy is being described as due to a decline in digital music sales. Apple's most recent quarterly report describes the situation a bit differently but also points to declining digital music sales. This decline is one reason given for Apple's interest in Beats. Yet it seems rather separate from the expansion of content on iTunes Radio.

Apple's Declining Digital Music Sales

Last week Katy Huberty of Morgan Stanley reiterated her Overweight rating of Apple pointing to rising App Store revenue.

Discussing declining iTunes Store revenue (minus App Store sales via iTunes I assume) she stated:

“The iTunes decline is a function of users spending more time and money on services such as Spotify, Pandora, and Netflix, and less on songs and videos in iTunes."

In their most recent quarterly report Apple addresses the issue from a slightly different angle:

“Growth in net sales from the iTunes Store, which includes the App Store, the Mac App Store and the iBooks Store, was driven by increases in revenue from App sales reflecting continued growth in the installed base of iOS devices and the expansion in the number of third-party iOS Apps available. This was partially offset by a decline in sales of digital music."

This is one development that many have put forth as a reason for buying Beats. Before the official merger announcement, Huberty suggested “streaming music" as a way to raise revenues.

Adding Non-Music Content to iTunes Radio

Though it's tempting to cast Apple's plans to expand content on iTunes Radio as another example of a move away from music, this development seems more about an expansion into the full range of radio content.

Apple's also making moves to go local with “locally targeted advertising” for iTunes Radio listeners.

Apple's content expansion plans for iTunes Radio include adding a new ESPN station with original ESPN programs and live World Cup coverage.

In addition, 42 local NPR stations will be added.

So paid downloads of music are declining and streaming is on the rise across the board at Apple.


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