Apple denies it’s to stop selling iTunes downloads

Apple has denied speculation that it is planning to discontinue iTunes music downloads within four years to concentrate on streaming. 

The report initially surfaced on Digital Music News and was quickly picked up by media outlets around the world. It cited sources from within Apple that disconnection could be as early as "within two years" or "the next 3-4 years, maybe longer" depending on how streaming cuts into iTunes sales over the next few years.

According to the story, the axing will begin in major music markets like the US and the UK where streaming is predominant, and then to countries like Australia.

However, Apple spokesman Tom Neumayr told Re/code the story was "Not true" and that the two deadlines were false. He did not elaborate further.

Some analysts also dismissed the Digital Music News claim. They argue that while Apple’s download revenue peaked in 2012, it remains an important revenue source. They point to how Drake’s Views sold 1 million downloads in the week it was an Apple exclusive.

Their contention is that while Apple has in the past dumped devices, it is still far too early for Apple to switch formats. But it would make business sense to focus on finding new revenue sources for Apple Music. Maybe this will be addressed at its annual developers conference next month.

When Apple launched iTunes 13 years ago, it reflected such an acute awareness of changing music consumer expectations that it was an instant game-changer.

It made it easy for fans to buy music online and transfer it to their iPads, at the time the most popular music listening device (4.69 million iPads sold between January to March 2011 alone). Music consumption became mobile and sexy.

It broke the monopoly of major labels at retail, with its catalogue including product from independent labels. Apple paid royalties promptly with transparent accounts of where and how much each track sold. 10 million songs were downloaded within the first few months of its US operation. That figure was over 25 billion songs by February 2013. 

By concentrating on the sale of singles at 99 cents, rather than albums, it made the contemporary music scene fast moving and exciting again. It forced labels to rethink their priorities.

Three years ago, Doug Morris, CEO of Sony Music Entertainment agreed, “Some people say Apple unbundled the album. In my mind, it had already been unbundled by piracy. So why not do it in a way in which we get paid? That’s what iTunes really did.” 

The streaming phenomenon has certainly cut into Apple’s download sales. In 2015 they dropped 16% from the previous year, and are expected to drop 25% to 30% this year. Nevertheless downloads are predicted to be turning over $600 million in 2019.

In the meantime, streaming on Apple Music had by October 2015 generating $65 million a month. Some analysts say by 2020, it will be making the same money that iTunes Store was at its peak four years ago.