Over the past few years, one of Apple’s sources of revenue was from selling music via their iTunes store. However it seems that either our consumption patterns have changed, or if rivals are stealing Apple’s business, but it has been noted by Morgan Stanley analyst, Katy Huberty, that sales from iTunes have been declining, and that Apple’s App Store has been growing in its place.
In fact as you can see in the graph above, it is estimated that come 2015, sales from the App Store will be greater than iTunes. This appears to be the trend which we can see taking place over the years.
For example in 2011, App Store sales was at 11%, versus iTunes which was at a whopping 89%. Perhaps as smartphones got more popular, demand for apps increased.
In fact it seems that iTunes sales never really recovered as with each passing quarter, sales in the App Store grew, while sales in iTunes shrank, to 2014 where we are looking at 43% App Store, and 57% iTunes.
Despite this downwards trend for iTunes, Huberty believes that Apple will be able to remedy this by introducing a music subscription service, which could be one of the reasons why Apple purchased Beats. The deal included Beats Music, which Apple has also promised to keep alive on competing platforms as well.
Unfortunately Beats Music has a pretty small subscriber base at the moment, which could be attributed to the fact that it is new, although it does pale in comparison to Spotify’s 10 million paid subscribers. What do you guys think? Will Apple be able to reclaim their place as the music juggernaut that they once were?