Apple has started to phase out iTunes music in favor of their subscription music service Apple Music. Apple has been slowing transitioning users to their $9.99 a month service which has grown like wildfire since its announcement on June 30, 2015, surpassing over 40 million subscribers. All this stemming from Apple’s purchase of Beats Electronics for 3 billion dollars back in May of 2014. Look back at the Beats purchase this was a multiyear plan for Apple to move to subscription music.
If you think about it that 3 billion dollars spent for Beats Electronics is nothing when you realize with 40 million subscribers times 10 dollars monthly is about 400 million a month Apple makes just on Apple Music. I am sure by now they have made their investment back plus profit. Apple moving to a subscription music platform is defiantly the future for them in the music space just from a financial standpoint.
First Apple sells songs for .99 cents on iTunes, a person may only buy one or two songs or they may buy an entire album for 12.99. After that purchase, they will never rebuy the song again so it’s a one-time revenue grab it’s not a recurring revenue like a subscription service.
Apple has stated that at the end of this month (March 2008) they will stop taking iTunes LP submissions. Apple has released a timeline saying they will look to discontinue downloads by the beginning of 2019, shortly after next year’s holiday season. In the even more recent news, the music industry had a fantastic 2017, driven by subscription music service revenues.
The writing is on the wall and Apple is headed in the right direction on track to surpass Spotify’s 70 million subscribers in record time. Spotify who is Apple’s main competitor in the space has recently made changes to their service to increase growth as Apple is hot on their tail as of late. Apple has one thing going for themselves and that’s the massive user base they have with the iPhone which allows them to show up late to the game but still succeed in the long run. Apple has not had much success in the smart speaker market as of late but that could change as the user base on their subscription music service Apple Music grows over time.