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Why Apple needs iTunes Radio

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Attitudes toward music ownership have shifted drastically over the last few years. And a report published Friday by Nielsen showing the number of music tracks downloaded versus streamed in the U.S. makes it very clear why Apple(s AAPL), which upended the music business a decade ago with its iTunes Music Store, had to start its own streaming music service.

The Nielsen Entertainment and Billboard’s 2013 Mid-Year Music Industry Report, which tracks music downloads, streams, radio plays and physical album sales from Dec. 31, 2012 to June 30, shows digital song sales are actually down 2.3 percent through the mid-point of this year: 682.2 million in 2013, versus 698 million a year ago. Meanwhile, digital streams of music are up 24 percent.

The comparison of the top 10 digital song sales versus top 10 song streams tells you all you need to know about the importance of music sellers such as Apple getting into streaming:
Soundscan 2013 YTD streaming vs downloads

iTunes Radio is coming to U.S. customers this fall as part of iOS 7 — though it will also work on OS X, Apple TV and Windows(s MSFT). It will be free to use but will carry ads. Meanwhile, Google(s goog) also recently launched its own streaming music service, Music All Access, very likely for the same reason: streaming music is hot right now.

One Response to “Why Apple needs iTunes Radio”

  1. David Justus

    In addition to showing the popularity of streaming over DTO, the charts show the popularity of free over paid. This assumes that most streams come from free sources, such as YouTube and non-paying Pandora users.

    I wonder how the ratio between the figures in the two above charts (around 45 to 1) compare to the ratios 30 years ago between free radio / MTV play and paid CD / Album / Single sales.