Apple

Music download sales decrease as streaming music gains

Friday, October 4, 2013 - 10:30am

Digital single-track sales are down over the first nine months of this year, compared to the same period in 2012. The decline has accelerated quarter-over-quarter, with the July-Aug-Sep period showing a 6-percent skid, according to Billboard. Digital album sales have fared better this year, gaining 2.6% over 2012, although the third quarter showed a similar summertime dip as single-track sales.

Download doldrums match the consumer trend toward Internet radio as an important venue for music discovery and the “access model” of ownership. Recent audience metrics reports from Triton and Pandora indicate that webcasting and Internet radio adoption is gradually and steadily climbing upward. As mobile listening crosses multiple devices, environments, and dayparts, access to cloud-based music jukeboxes takes the place of unit purchases and local storage. 

Apple and Google hedge their bets by operating on both sides of the fence, offering digital albums and tracks for sale, as well as customized listening to enormous catalogs of music. As a third leg of the stool, both services also provide cloud storage of owned music files -- a hybrid of the ownership and access models.

Is Amazon inching toward a streaming music service?

Thursday, September 26, 2013 - 11:55am

Amazon caused a media ripple yesterday when it connected its previously independent Amazon Cloud Player with its MP3 Store. The Cloud Player is an online music locker where customers can store their owned tracks (whether purchased from Amazon or not), and play them from any device which can run an Amazon Cloud Player app (pretty much any device). People who prefer outright ownership of music, as opposed to the access model which motivates Spotify and Rhapsody, can get the benefits of mobility by maintaining their collections in the cloud, like celestial jukeboxes.

In mashing up the Cloud Player with the MP3 Store, Amazon joins buying, storing, and mobile playing in an agreeably seamless connection. That’s why Hypebot headlined the news: “Amazon Finally Gets Closer to iTunes” -- Apple’s download store is likewise integrated with its iCloud service.

But of course Apple owns the whole three-legged stool of downloading, cloud storage, and internet radio streaming, designed to cozy the user into an embryo of uninterrupted music monetization, at home and on the go. No less for Google, too, by the way, even though nobody’s talking about it during this period of obsessive Apple scrutiny.

Straddling the competitive fence which divides Apple and Google is one of Amazon’s cutting advantages. It has navigated mobile-OS politics by forking Android into a specialized operating system for Kindle Fire tablets, thereby remaining secular amid the tablet holy wars. Amazon apps are distributed to both iOS and Android phones and tablets. Amazon is everywhere, trading rabid fanboyism for the privilege of being despised by nobody.

From what better position to forge the missing link in the triplet chain of music merchandising? Last May, The Verge reported that Amazon was in talks with labels about a music subscription service. This is the ecosystem roadmap: sell the downloads first; provide universal cloud access second; lock in the user with unlimited listening third. If Amazon were to bundle a streaming platform into what is already a packed-with-value Amazon Prime membership, which now provides streaming movies and television, the media-loving consumer sector might undergo some kind of rapture and rise to the heavens.

If not, yesterday’s cloud/download maneuver will have been just another incremental product update. We’ll see.

Apple shakes the ground with early iTunes Radio usage

Tuesday, September 24, 2013 - 12:10pm

Apple is showing off some dazzling M’s:

  • 200M iOS 7 activations (iOS 7 includes iTunes Radio by default)
  • 9M iPhones sold (combined iPhone 5s and 5c)
  • 11M unique listeners on iTunes Radio

That last item is generating some noise in the media echo chamber, and some misunderstanding. Witness this CNET headline: “At this pace, iTunes Radio beats Pandora in a month.” As baseball enters the scramble of its final pennant races, it should be a reminder that in sports and business, it’s a long season. Predicting Pandora’s defeat after less than a week of Apple competition is like predicting an undefeated season for a pitcher who wins his first game in April.

Furthermore, there is an importance difference between unique users and active users. As anyone in the content business knows, attracting unique users is hard, but converting them to active users who return to the brand is even harder. Pandora has over 200M uniques, and over 70M actives. It is fair to presume that many of Apple's 11M uniques were engaged in experimental listening. The three-month build-up to iOS 7 and iTunes Radio, following Apple’s WWDC announcement in June, naturally created some degree of must-try anticipation. No data are available as to whether Pandora experienced a listening dip over the weekend. But whether it did or not, it is reasonable to assume that Pandora and Apple are sharing uniques. Some of them will probably become unglued from existing Pandora habits. But it’s also reasonable to assume that with Apple’s colossal iOS 7 footprint (e.g. those 200M activations, with more to come), some of the 11M uniques are first-timers dipping their toes into the currents of internet radio for the first time. Those might be users that Pandora will never acquire ... or never would even absent Apple's gravitational field.

Music streaming is not a one-winner business, any more than the mobile ecosystem industry consolidates around a single dominant player. However, carrying through that comparison, major-league internet listening will probably boil down to two, three, or four preeminent platforms, surrounded by a cloud of smaller indies. If that’s how it plays out, it will in retrospect be unsurprising that Apple, with its intense user trust and equity in the music and mobile businesses, took a giant first step.

It might be worth noting that on Monday, Pandora stock (ticker: P) skidded from its Friday close of $26.99 to yesterday’s final price of $24.26, a plunge of just over 10 percent. There can be no certain connection between Apple's strong start and the precipitous one-day decline of P stock, of course. But Wall Street is no less reverberative than the media business.

iTunes Radio more of a danger to smaller players than to Pandora, analysts suggest

Monday, September 23, 2013 - 12:20pm

Industry observers who spoke with Ad Week say don't look for iTunes Radio to decimate current leaders like Pandora and Spotify.

"Remember, even on (Apple's) own devices, Amazon Kindle books are the most read eBooks despite Apple's attempt to come in a change that business," said Forrester Research analyst James McQuivey. However, most of these experts think the competitive presence of Apple may be enough to squeeze out some smaller players.

"iTunes has a massive user base. Even if only 5 or 10 percent sign up, they are going to affect the on-demand radio stations that exist right now," said Mark Simpson, president of digital marketing firm Maxymiser. "I think we'll see a shrinkage in the number of players, while iTunes Radio grows into a significant player quite quickly."

Lauren Russo of media buyer Horizon Media sees Apple's entrance as a "win" for companies like hers. "Greater competition in the space will lead to better pricing and/or value" for ads, she said.

ABI Research predicts 294 million consumers will use Apple’s mobile iOS, updated last week with iTunes Radio "baked-in," by year’s end.

Read more in Ad Week here.

For a company known for breaking new ground, Apple delivers "nothing new" with iTunes Radio, say reviewers

Thursday, September 19, 2013 - 10:55am

Perhaps because it's Apple, the bar just gets set unrealistically high.

Not that anyone (that we've seen) is outright panning the new iTunes Radio service, one day after what was the most anticipated launch in Internet radio history. It just seems that some folks are, well, underwhelmed.

Billboard's Alex Pham "grades" the service as "a middling student with great unfulfilled potential." The spirit of this (and other reviews) is that iTunes Radio does the basics well, but where's the Apple excitement and pizazz? Pandora's been doing Internet radio well for 10 years.

He found the interface to be great, station creation simple and intuitive. But the genres seems unoriginal, and the Siri interface isn't really "ready for prime time." Read more in Billboard here.

Gizmodo's Mario Aguilar agreed the service was competent, and even "beautiful and dead simple to use." In fact, he found it "better than Pandora —- if only because there is less repetition. For its very limited functionality, iTunes Radio is very good at what it does."

But again, there's that "very limited functionality." Apple used to revolutionize. But those days may be over.

"iTunes Radio is just a decade-old product baked into a media player that hasn't added a noticeable feature since iTunes Match in 2011," Aguilar wrote. The service is "just another path to the iTunes Store... The only significant difference between iTunes Radio and the rest of an increasingly crowded field is that every song that's playing comes with Buy link."

Read more in Gizmodo here.

What are your experiences with iTunes Radio? Is it worth the hype? How does it stack up to Pandora, or Slacker, or iHeartRadio, or any of the other hundreds of competitors (such as the winners of our RAIN Internet Radio Awards)? We'd love to get your input. Please share your comments below.

Webcast industry awaits impact of Net radio's most-anticipated launch ever

Wednesday, September 18, 2013 - 12:40pm

Is today the day it all changes? At some point today, Apple will release iOS 7, and with it, the most anticipated service in the history of Internet radio: iTunes Radio. And it's quite possible that the entire competitive landscape of Net radio shifts dramatically.

Leading webcasters Pandora and Slacker are doing their best to steal some of Apple's thunder today -- with updates for their services on Apple products. Pandora chose today to not only unveil redesigned company logos (left), it's speaking directly to Apple's audience with a new version of its app for Apple's iPad. The webcaster call it the "biggest redesign of the tablet app since launching on the platform when the device was first introduced in April 2010." Huffington Post covers the app and logo update here, with some nice images.

Slacker too has something for the Apple crowd, an "all-new" mobile app for iOS 7 (lower right), with what it calls the "My Vibe" feature. "My Vibe" offers human-programmed playlists for various activities (think Songza's Music Concierge or iHeartRadio's "Perfect For") like working out, studying, and driving. Venture Beat has the coverage here, along with lots of screenshots.

As impressive as these mobile app updates may be, it's hard to imagine focus being anyone but on Apple today. But how big a splash will it make, with listeners?

We have no information as to whether iTunes Radio listening will be measured by Triton Digital's Webcast Metrics (as are dozens of other leading webcasters like Pandora, Slacker, Clear Channel/iHeartRadio, CBS Radio/Radio.com, and more). Nor do we know if Apple will publish their own listening metrics, as Pandora does monthly. So it might be tough for others in the industry to gauge exactly the new service's impact with consumers.

Certainly advertisers respect the reach of Apple, and are betting big that consumers will be there. As we've reported, major brands like Pepsi, Macy's, McDonald's, Nissan, and Procter & Gamble have paid as much as $10 million to be category-exclusive iTunes Radio launch partner advertisers. AdAge reports here.

Writing in Fast Company here, commentator John Paul Titlow says that while the service is a great strategic move for Apple -- to reinforce music-purchasing behavior in a market that's clearly moving towards "music as a service" on-demand consumption -- "for users, the benefits of iTunes Radio are less apparent, especially those familiar with Pandora." Pandora's 13-year head start on refining its music recommendation, he reasons, is a significant hurdle for any service looking to best it on its merits.

That said, Kevin Tofel at GigaOm says he's enjoying iTunes Radio, at least when compared to Google Play Music All Access (which recently introducing genre-based online radio). He writes (here): "I’m shocked that iTunes Radio is offering what I think is more music that I enjoy than Google... I find that with Google All Access, I’m spending more time tuning the stations to my likes and dislikes of each song. For iTunes Radio I might have disliked two or three songs over the past week."

We'll certainly follow up with more coverage of today's launch of Apple's iTunes Radio.

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