According to a research done by Morgan Stanley, Apple Inc. (NASDAQ:AAPL) might lose iTunes sales because of the global slowdown in recorded music sales. The sale of recorded music touched $15 billion in 2013 with streaming, ad-supported, and paid digital downloads accounting for over 40% sales. However, the sales were down by $1.5 billion as compared to 2012 with alarmingly lower sales in 2014.
iTunes Store would generate less than 50% of the online services revenue of Apple Inc. (NASDAQ:AAPL), as mentioned by the report. Its revenue will fall up to 47% in the online services revenue of Apple in the fourth quarter of 2014 and 44% in the first quarter of 2015. It is quite clear from the report that customers are lowering their music purchases and the majority of customers are looking for music channel subscriptions including Netflix Inc. (NASDAQ:NFLX), Pandora Media Inc. (NYSE:P), and Spotify.
According to the experts, Apple Inc. (NASDAQ:AAPL) acquired Beats Music and Beats Electronics simply to increase the brand power of its online music store. The company spent $3.2 billion for the acquisition with both the co-founders joining the company. Billboard magazine released some exciting stats earlier stating that the online music sales are falling considerably as compared to the previous years.
According to the Billboard, the second quarter 2014 had an average 4.55 million weekly album sales as compared to 4.75 in the first quarter. The stats are even going down for this quarter with 4.2 million sales in the first 8 weeks. There is a 14.6% decline in U.S. album sales with 12.8% decline in track sales and 11.7% decrease in digital album sales. The declining sales of recorded music is a big concern for the industry and it might not be possible for Apple Inc. (NASDAQ:AAPL)’s iTunes Store to revamp its sales in near future.
This article has been written by Prakash Pandey.