Forum: General Discussion

Apple is scheduling a complete phase-out of music downloads from the iTunes Store by early 2019, per sources at the company.

Apple is aggressively scheduling a phase-out of music downloads from the iTunes Store, according to multiple sources tied into the platform or working at the company itself. The termination has been in motion since 2016, when sources first tipped the story to Digital Music News.

At that stage, the plan was to sunset music downloads ‘within 2 years’. Now, plummeting download sales may be creating pressure to make good on that aggressive schedule. “More and more, [downloads] are legacy,” one source told DMN over the weekend. “That part is obvious.”

Apple has told DMN that no such phase-out plan exists. One source has repeatedly insisted that the plan not only exists, but that it is ‘on schedule,’ or even ahead of the original schedule.

Throughout the discussions, sources have demanded complete confidentiality. Phone conversations or personal email accounts were preferred, largely to avoid corporate monitoring of communications.

The current timetable calls for a complete termination by 2019, shortly after the 2018 Christmas season.

Importantly, that gives Apple two more Christmas seasons to operate. The plan minimizes disruptions among buyers, with a transition slated for a post-holiday, slower period in 2019.

The phase-out strategy also includes a clever transition towards Apple Music, the company’s streaming platform, according to one source close to the transition. According to details shared, the company would migrate a user’s iTunes download collection towards a brand-new Apple Music account.

Then, as part of a three-month transitionary trial account, a user’s entire collection would be migrated into streaming equivalents. All previous playlists and details would also be translated.

Downloads unavailable as streams would be grayed out, pending future licensing. “But you can always go back and listen to the downloads, they always will work,” another source noted. Over time, “more stuff becomes licensed” and the grayed out collection becomes de minimis.

But the key difference is that users won’t have access to purchase music downloads within the iTunes Store. “That road will be closed,” the source noted.

Word of the transition is happening as music downloads continue to collapse.

The move may be driven by data. According to details shared by Nielsen, paid downloads are crashing in 2017. During the first six months of the year, track downloads collapsed 24.1% in the US, while digital albums slipped 19.9%. Both formats are likely to drop 30% or more in 2018, eventually winnowing away to something negligible.

Concerns of iTunes ‘Bloatware’.

All of that is raising concerns about an overloaded iTunes, especially among Apple engineers who are increasingly frustrated with the platform. One source noted that iTunes has become a “big mess,” while another pointed to recurring “bloatware” problems that are affecting customers.

Pulling out lower-performing formats, especially music downloads, helps to solve the issue.

And then, there’s Spotify.

Also informing the phase-out is a meteoric Spotify. Despite numerous entrenched advantages, Apple Music remains heavily behind the Swedish leader. At last count, Spotify had more than double the amount of Apple Music subscribers. Spotify counts 60 million paying subscribers, while Apple Music has yet to just reached 30 million.

And Spotify’s broader numbers are dwarfing those of Apple. Just recently, Spotify reported a userbase of 140 million active users. Apple, preferring a paid-only platform, has a far smaller audience size.

Separately, Spotify is moving towards a high-profile Wall Street entry. And, totally overshadowing Apple Music’s ambitious efforts to overtake streaming.

That may be causing serious frustrations within Apple.

Just recently, Apple Music chief Jimmy Iovine splashed salt on Spotify’s success, discrediting the company’s business model and vulnerability.

“If tomorrow morning… Amazon says, ‘Why don’t we try $7.99 for music?’ Woah, guess what happens?

“The streaming business is not a great business. It’s fine with the big companies: Amazon, Apple, Google… Of course it’s a small piece of their business, very cool, but Spotify is the only standalone, right? So they have to figure out a way to show the road to making this a real business.”

Sounds scary. But the reality is that Amazon Music is already sharply discounted. In fact, Amazon’s Prime-bundled streaming music plan is effectively free, yet Spotify clearly remains the market leader.

That could be forcing some soul-searching at Apple, with product clarification a healthy strategic step. Indeed, Steve Jobs was notorious for pushing consumers into the future, even before they were ready for it.

These days, innovators like Spotify are doing the pushing. All of which makes it increasingly difficult for Apple to remain in the past.