Apple’s annual report, filed today, confirmed the obvious: music sales through its iTunes Store have declined. The company did not give a figure, noting only that the drop was more than compensated for by growth in app sales, but a recent WSJ report put the decline as high as 14%.
Growth in net sales from the iTunes Store was driven by increases in revenue from app sales reflecting continued growth in the installed base of iOS devices and the expanded offerings of iOS Apps and related in-App purchases. This was partially offset by a decline in sales of digital music.
The fall in music downloads was of course the primary motivation behind the company’s largest acquisition, the purchase of Beats, as it moves towards a full music streaming service of its own. Apple is expected to rebrand Beats Music as an Apple product, with a rumored launch in February of next year …
Even without Beats, Apple almost doubled its spend on acquisitions this fiscal year, from $496M to $957M. The company more than doubled its investment in research and development over the past three years, from $2.4B to $6B. While some of that increased spend will undoubtedly have been on the Apple Watch, it does seem to suggest that tales of the death of innovation in Apple are somewhat exaggerated.
Hiring is also up, from 80,300 full-time equivalent employees to 93,600, with most of that growth in corporate rather than retail.
There were some cautionary notes in its filing. The company revealed that average revenue from its retail stores had fallen slightly across the past couple of years, from $51.5M in 2012 to $50.6M this year. It also warned that the Irish tax investigation may lead to both a bill for back-taxes and higher taxes in the future, and that its insurances may not fully protect the company against the growing threats from cyber attacks.
Via VentureBeat
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Investments in R & D – Maybe the Real Apple TV?
I can only hope! ;)
In the past there was so much good music that it was rare for a song to stay at the top of the charts for more than two or three weeks. These days that is the rare exception – most tunes stay on top for much longer due to a lack of competition. The music biz has become boring, mechanized, and so highly produced that it is less art and more business. The great music gets overlooked by an industry that is simply a profit game. Instead thirty-five #1 songs in a year, now there are maybe ten #1 songs in a year.
Obviously that will impact sales.
Exactly. iTunes isn’t declining. Music is.
I’d have to disagree. More likely has to deal with the fact that steaming, especially among younger audiences like myself, has become the preferred way to listen to and enjoy music. Why spend hundreds of dollars on iTunes for a couple hundred songs when I can when for the same amount j can stream an unlimited amount for a couple years. Economically it makes sense and it would explain Apple’s purchase of beats and beats music, which is rumored to be integrated into iTunes as a streamig service. Streaming wasn’t even possible or not nearly as prevalent a couple years ago as it is today which is why data shows it’s just now starting to eat into iTunes sales. Had streaming been available sooner so would the decline in iTunes saels. You’re argument that music itself is declining has no merit as it is completely subjective and backed up with no fact. (Plus I’m sure you’re parebts said the same thing about the music you listen to when you were young). And as for less number one hits, you have to take into account a certain demographic will have a majority stake in the amount of times a song on iTunes is purchased so they’re song and only their songs remain at the top. Plus again a lot of other people use other streaming serived so their taste will never get shown. There are plenty of good artist out there. You just have to look for them and iTunes is definitely not the best way to do that. And lastly the music industry has always been amount making money. Nothing has changed. As a business it’s their obligation and last time I checked no one goes into business to loss money or just break even.
They should try fixing the bug that no longer allows iOS 8 to sync music. That would be a good start. #syncgate
What’s wrong with iTunes Match?
iPod were mear Music player. iPod Touch, iPhone and iPad are great multi contente players. As soon as users became familiarised with the iPod interface, they wanted more. iPod Touch and iPhone came alone and later iPad. It changed everything. Music is not at the center of attention anymore in the mobile market. It has many competitors. I think the decline in sales is natural. We have to remember iTunes also has competitors like Amazon and Google in the music market. No surprise here, and no surprise at the volume they are spending in R&D and acquisitions.
Fat chance we’ll ever see anything new in iTunes. How many times has Apple purchased a company interested in music, and we get a crap update to iTunes. So there are rumors that we’ll get Beats integration into iTunes, but here we are six months later and nothing new to report. At the minimum, iTunes Match subscribers should have free accounts to Beats Music and vice versa. I love Apple more than anyone, but this rumor of Apple R&D into music, video, or anything else just &^%&^% me off.
I’m currently tossing up between paying $12 a month to buy 1 album, or using that same money for a Spotify subscription. I already pay $5 a month for Pandora. Albums are just so expensive when you have a limited music budget, and streaming means I’m not only getting access to a single album.