Apple Inc. (AAPL), Amazon.com Inc (AMZN), Pandora Media Inc (P): Streaming Rises While Digital Music Sales Drop
Music sales report for the just concluded year, 2014, appear to offer insight into what is likely to be the shape of the music sale and streaming business in the future. While it is not surprise that music streaming activities increased significantly in the year while the sale of digital music declined. To some extent, the latest report on music sales also offers a hint to investors in music industry about where they can have their best bet.
Nielsen SoundScan revealed insightful data this week whereby it disclosed that streaming music increased 54% in 2014 to 164 billion streams. On the other hand, the sale of traditional albums was down 9% to 117.6 million in 2014. Additionally, song sales declined 12% to 1.26 billion last year.
As if that was not enough, the overall sale of albums, including digital and physical copies, fell 11% to 257 million in 2014. In other words, the sale of music albums sale was not only underwhelming but the future of the business is also disturbing.
The rise in music streaming has been linked to a number of developments in the space, including Apple Inc. (NASDAQ:AAPL)’s acquisition of Beats Music. Several players have also entered the space, and each is helping raise the profile of music streaming service. Additionally, providers such as Pandora, Spotify and Amazon also continue to expand their offerings, making the music streaming even popular. It also appears subscribers are responding positively to the invitation to join the streaming music community.
Apple Inc. (NASDAQ:AAPL) and Amazon.com, Inc. (NASDAQ:AMZN) are some of the new entrants to the subscription music business. While they pose a threat to industry leaders such as Pandora Media Inc (NYSE:P) and Spotify, their contribution is positive to the industry, especially looking at the data from Nielsen SoundScan.
To boost its standing in the music subscription market, Apple Inc. (NASDAQ:AAPL) is widely expected to restructure Beats so that it can make it more popular. Such restructuring may include making Beats a native app on iOS and cutting subscription costs. Currently, Beats asks for a subscription fee of $9.99 per month or $99.99 for 12 months where a user chooses a full-year deal. However, cutting monthly cost to $5 per month is considered more palatable in the competitive market.
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