With free music more accessible than ever before, music downloads are on the decline. Specifically, The Wall Street Journal reports that music downloads on iTunes are down by 13-14% since the beginning of the year.
Digital music sales at Apple Inc.'s iTunes store have fallen 13% to 14% world-wide since the start of the year, according to people familiar with the matter, underscoring the fragility of the music industry's nascent recovery.
Not blind to the changing times, Apple earlier this year acquired Beats Music for $3 billion. While Apple hasn't yet integrated the Beats app into iTunes, Apple is reportedly working hard behind the scenes to get, surprise surprise, favorable pricing from the music industry. Recent reports have indicated that Apple has been trying to convince record labels to agree to a $5 monthly rate for on-demand streaming,
a significantly lower price than the standard $10 fee associated with most other on-demand music services.
While it remains to be seen how those negotiations play out, Apple, on account of its immense iOS subscriber base, is in a unique position to get record labels to capitulate to lower pricing. With hundreds of millions of consumers already using iOS devices, Apple can make a case that it can make up for lower monthly fees with tremendous volume. As we've noted previously, if Apple can convince even 2% of existing iOS users to pay for a monthly subscription to Beats, it will already have as many paying customers as Spotify.
It remains to be seen, though, whether Apple plans to make Beats Music part of the iTunes app or continue to let it live on its own as a standalone app. To that end, the Journal claims that Apple will be relaunching Beats "next year as part of iTunes."
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