Audio Video News

How long before music subscription services completely overshadow downloading? Sooner than you might think. Digital Music News is reporting that unnamed sources with strong ties to Apple say the tech giant is preparing to abandon iTunes music downloads.

From the report:

Apple is now preparing to completely terminate music download offerings on the iTunes Store, with an aggressive, two-year termination timetable actively being considered and gaining favor. According to sources to Digital Music News with close and active business relationships with Apple, discussions are now focused “not on if, but when” music downloads should be retired for good.

…Sources indicated that a range of shutdown timetables are being considered by Apple, though one executive noted that “keeping [iTunes music downloads] running forever isn’t really on the table anymore.” Also under discussion is a plan to “ride the [iTunes music download offering] out for the next 3-4 years, maybe longer,” when paid music downloads are likely to be an afterthought in a streaming-dominated industry.

Since publication of this story on Wednesday, Apple has issued a rare denial of reported shutdown proposals.

Part of the debate is that paid music downloads still account for hundreds of millions of dollars to Apple, worldwide. According to an estimate revealed by music industry analyst Mark Mulligan at Canadian Music Week in Toronto, iTunes music downloads will still be worth an estimated $600 million in 2019, though that is down from peak revenues of $3.9 billion in 2012.

“If he were alive, Jobs would have killed it,” one source bluntly stated (and he’s probably right). But this is a ship that is sinking, fast. “Last year downloads declined by 16% in nominal terms,” Mulligan noted. “This year they are tracking to decline by between 25% and 30%.”

Earlier estimates by Digital Music News projected song download revenues closer to the $750 million mark, though that could be overly-optimistic given recent declines.

…A critical piece of this puzzle comes from Apple Music, the subscription service launched last July that already boasts 13 million paying subscribers (as first reported by Digital Music News). According to Mulligan, that number is surging towards 20 million by year end, with Apple’s streaming revenues surpassing peak music download revenues by 2020. “By 2020 [Apple’s] download business would be tracking to be 10 times smaller than streaming revenue but, crucially, streaming revenue would nearly have reached the 2012 iTunes Store download revenue peak,” Mulligan estimated.

“This is the point at which Apple would choose to turn off the iTunes Store…”

Read the full story here.