updated 04:54 pm EDT, Wed April 9, 2014
iTunes Radio failing to convert listeners into buyers
Apple is considering a major overhaul of the iTunes Music Store in light of iTunes Radio failing to slow the decline of music downloads, say anonymous executives allegedly familiar with the company's plans. One of the key features of iTunes Radio, from Apple's perspective, is the ease with which it lets people by music from the iTunes Store. Only about 1 to 2 percent of people are actually tapping the Buy button though, and overall music downloads have declined by more than 15 percent.
Compounding Apple's problems are the many alternatives record labels have for distribution. Streaming services like Spotify and Pandora are far more popular than iTunes Radio, and multi-platform; likewise, labels can upload music videos to YouTube. One independent label says that iTunes' contribution to its revenue has dropped from 70 percent in 2012 to 50 percent today. Another source claims that as much as two-thirds of Apple's "high-value" customers are now with subscription services.
Apple is reportedly mulling a variety of options, from Spotify-like on-demand streaming to putting iTunes on Android. Another possibility is negotiating download sales windows that favor Apple. Sources say however that action plans are being hotly contested, both within Apple and among content partners. iTunes Radio was allegedly conceived as part of a transition to streaming along with iTunes Match; Match has also been disappointing though, with label sources claiming that it only has about 1 million subscribers.
The exclusivity of the iTunes Store to Apple hardware (apart from Windows PCs) is also believed to be an obstacle. Android is now the dominant phone platform on a global level, and its users have little need to buy music through iTunes, since they can choose to get music from Google Play or any other download service, if they don't skip straight to streaming.