Will subscription music overtake iTunes in 4 years time?

Discussion in 'Apple, Inc and Tech Industry' started by EbookReader, Dec 8, 2012.

  1. macrumors 65816

    Apr 3, 2012

    2010: 8.2 million paying subscribers
    2011: 13.4 million paying subscribers (growth of 63%)
    2012: ?
    2013: ?
    2014: ?
    2015: ?
    2016: ?

    In order to overtake Itunes, subscription services need around 30 million paying subscribers. Will it get there in 4 years time on December 2016?

    The major music subscription services are: Spotify, Deezer, Rhapsody, Muve Music, Melon, Mnet, Xbox Music, Sony Music Unlimited, MOG, Rdio, Simfy as well as countless other smaller players.

    We will know in a month time when IFPI publish its report for 2012 the rate of increase from 2011 to 2012 (the old growth rate was 63%). With smartphone becoming every more popular, it can only mean good things for subscription music.

    The leader of subscription music right now is Spotify. The rest are playing catch up (Deezer 2 mil, Melon 2 mil, Rhapsody 1 mil, Mnet 1 mil, Muve music 0.8 mil etc....)

    January, 2010:------------ 250,000 paying subscribers
    March 17, 2010:----------- 320,000
    July 20, 2010: ---------------- 500,000
    December 8, 2010: ------ 750,000
    March 8, 2011:--------------- 1,000,000
    July 14, 2011: -----------------1,600,000
    Sept 21, 2011: ---------------- 2,000,000
    Nov 23, 2011: ------------------2,500,000
    Jan 26, 2012: -------------------3,000,000
    July 31, 2012:--------------------4,000,000
    Dec 6, 2012: ---------------------5,000,000 paying subscribers


    Right now, where is the subscription music in the technology adoption cycle?
    What about subscription movie/tv like Netflix? (did a google search and netflix right now has 25 million paying subscribers)



    Since subscription music requires either Android/iphone to work (in most cases), I hope this thread can stay in the iphone forum.
  2. thread starter macrumors 65816

    Apr 3, 2012
    When will Apple release their version of Spotify?

    Apple bought Lala a few years back so Apple right now have streaming technology.

    The other option is that Apple can buy Spotify or Rhapsody or Deezer to get a head start in the subscription music biz.
  3. macrumors 68030


    Aug 16, 2011
    Philadelphia Area
    Why do people think that because apple has money that they can just buy up any company they want. Buying Spotify is not an option if Spotify isn't for sale.
  4. macrumors 6502

    Aug 11, 2010
    Everyone has their price.. if Apple wanted Spotfy, they could have it.

    But I don't think subscription music services will overtake iTunes.
  5. macrumors 6502

    Aug 27, 2011
    Spotify is some good stuff. Saving your music playlists for offline is nice and gotta love the radio built in. Though the radio isn't as good as Pandora.
  6. macrumors 603

    Feb 4, 2008
    I'm torn on this. I had Spotify for a few months so I could listen to a ton of stuff. But I got rid of it recently because I'm looking for any way to cut costs. One problem it has is the lack of a slick interface like iTunes. You can pretty much see the top 10 tracks, some new releases and that's it. You have to search for everything else.

    I also couldn't stand having to put everything in a playlist. Or at least shorten the steps to get a full album in there.

    But the main problem is e lacking tracks. Apparently artists make much less off streaming than sales, so it takes them a long time, if ever, to get on there. I mean after holding out for so long to sell music, how long will it be before the Beatles and AC/DC are on Spotify?
  7. thread starter macrumors 65816

    Apr 3, 2012
    The artists holdout from subscription music are pretty much the same who held out from Itunes. They favored CD over digital download. Now they are favoring digital download over subscription. History is repeating itself.

    Right now, subscription music is at around $2 billion a year. How long will they hold out for when subscription music is growing very fast? In a few years time, that $2 billion a year will be $4 billion.
  8. macrumors 604


    Apr 6, 2007
    All these facts are figures are great, but what's the point of it?

    If you're implying that "overtake" means that outright purchasing of music becomes irrelevant, then the analysis is just as foolhardy as those "analysts" who assume that everyone who buys an iPad never uses a desktop or laptop anymore.

    Quite a few users (myself included) both subscribe AND purchase content. I use the subscription to find new music, and of the new music that I like, I buy.

    That behavior doesn't appear to be reflected at all in your mass of graphs and charts though.

    Just trying to figure out what the point is of this exercise, here. Especially considering all the work that seems to have gone into making that point.

    (tl;dr: So someday, maybe, subscription music will outpace purchased music. So what?)


    Not true. Pandora, Spotify, Slacker, last.fm, soundcloud, siriusmXM etc, don't require mobile devices to work. THey work fine on other platforms. And grooveshark's iOS app even requires a jailbreak.
  9. EbookReader, Dec 10, 2012
    Last edited: Dec 10, 2012

    thread starter macrumors 65816

    Apr 3, 2012
    overtake from dictionary.com

    Catch up with and pass while traveling in the same direction.
    Become greater or more successful than: "Germany overtook Britain in industrial output".

    My point is that Apple should launch its own version of Spotify/Rhapsody/Deezer because in a few years time, subscription music will surpass Itunes in music revenue/sales.

    vinyl -> cassette -> CDs -> digital download ->subscription music

    Well, most people who pay $10 a month to access music, don't usually buy music anymore since they are already paying $10 a month (or $120 a year worth of music). There are people who rent movies from Redbox/Netflix and then buy them on DVD/Blu-ray but they are rare.
  10. macrumors 6502

    Jun 7, 2011
    I haven't seen numbers, but I'm inclined to agree.
  11. scaredpoet, Dec 10, 2012
    Last edited: Dec 10, 2012

    macrumors 604


    Apr 6, 2007
    While patronizing, you've actually proven my point.

    Overtake != Replace
    Overtake != Cannibalize

    I know lots of people like to WISH that's what it meant, for reasons that lack any real logic, and that sometimes replacement and cannibalization DO happen, for certain reasons. But in this case, both can coexist and have their place.

    I'm pretty sure they've been looking into it for a while now. And I'm sure their graphs are much prettier than yours, too. But it's not here yet for reasons I'm about to go into.

    I wouldn't go that far. There are lots of encumbrances to subscription music as opposed to digital download. Streaming royalties, network connectivity issues and broadband usage caps, just to name a few.

    In fact, pretty much anyone who has actually realized that Apple has been working on this for a while now ALSO know that the main reason it hasn't happened yet ISN'T because they lacked the vision and foresight of your charts and graphs. It's because the record labels aren't on board. Apple, being Apple, likely wants a broad, across-the-board agreement that includes a large percentage of the existing iTunes library if not all of it, and wants to pay less revenue than its would-be competitors, and the labels aren't willing to agree to Apple's terms for streaming royalties. They have to come into agreement before it happens, or else Apple's service will be just as mediocre and lacking in selection as all the other also-rans in the market today.

    I also wouldn't be surprised if the wireless carriers had a say in it too. The likes of AT&T might either want a cut in revenue (e.g. an "iRadio streaming plan" that's an extra charge to permit streaming over cellular) or an all-out limitation of the service to WiFi only.

    Where are the numbers that say this? Show us.

    And how many of these people were actually buying music to begin with, as opposed to just torrenting it?

    You're comparing apples to oranges. People aren't buying DVDs because the quality is inferior, and Blu-ray hasn't caught on as well as the studios would have liked because it's a physical format, whereas netflix streaming and renting/buying over iTunes (which is useful in the MANY cases where Netflix lacks a streaming version of a film) are way more convenient and advantageous.

    Likewise, people are buying fewer physical CDs, because you can get better, more convenient digital copies online... OR subscribe.

    And in any case, none of this resolves the core issue here: the labels have to be onboard.

    There will probably be a surge in subscribers to services like Pandora in the near term, but only because they are still in a natural growth stage, like any nascent technology.

    The numbers the OP represents though are are typical of overly optimistic projections. Just like the tech boom in the 90s. Just like the housing bubble. Just like the energy investors who expected we'd be paying $6.50 a gallon for gas by now.

    I see one of two things happening:

    1. Apple might cut a deal with the labels, but there will be restrictions that make it less appealing for all but those who would probably pirate music anyway. That's a fickle bunch of people who have little incentive to pay $1 a month, let alone $10 a month. There will be a growth for a while but it'll plateau when people grow weary of the limitations. Then investors and execs who expected there would be billions of subscribers will freak the hell out and overreact, and stocks will tank for a while as a result.

    Extra points: Some people here on MR subscribe to iStream or iRadio for a while and then complain about the onerous limitations, bellyache about how Apple botched it, it's worse than Ping, they can't get anything right anymore, Steve jobs is rolling in his grave, Tim Cook is a horrible CEO, they didn't innovate, blah blah blah...

    2. No deal with Apple for an extended period, and subscriber services tank when growth stalls MUCH sooner as customers get bored because the selection of music is STILL limited. Because again, everyone overreacted.

    Although it doesn't sound like it, I'd LOVE for streaming services to take off. But I don't see it as antagonistic against digital downloads. And I'm also a realist: it's really not going to be as good as we all hope it's going to be. The idiots running the record labels would rather go out of business than actually agree to less revenue.
  12. macrumors 68020

    Nov 15, 2011
    It won't be taking over how I use my device. And if they try to push it on me, I'll switch to something that doesn't.

    1. I like to have physical posession of my music. Be it an actual disc or a hard drive containing various files of music. I want posession.

    2. I'm on the "large capacity phone/small data plan" methodology now. I was reversed before with a 16GB iPhone and unlimited data. I've found it more cost-effective to just buy a large-capacity (64GB) phone and a 2GB data plan. Less data used and I can store all of my aforementioned music on it. (also consumes less battery for daily listening)

    3. All things cloud need to be looked at from a security perspective. That's all I'm really going to say. If you care to debate or tell me how "the cloud is the future" have at it. If you care to see my point, just bing it and read up on the shorcomings of cloud-based offerings in terms of security.
  13. macrumors G3

    Jessica Lares

    Oct 31, 2009
    Near Dallas, Texas, USA
    Subscription services have been around for a very, very, very long time now. The problem is that, like what Michael CM1 said, these people can jump off board at anytime - I did too. 10 million people AREN'T paying for Spotify, but still are using it by the way, which only makes the artist payout even more of a problem because just ad revenue isn't enough, which is what is happening to Pandora. Spotify is going to get bigger, but not in the way it wants to, free users are going to continue to add up, versus paid.

    Most of us should be buying music. We're old enough to appreciate it, we have the money, and we're all owners of devices that can play it. And honestly, you should be thinking about why exactly you're paying $9.99 to listen to a playlist every month, when you could have owned that music for about that same price that you paid for Spotify in the first month. There are other means of sampling music, like YouTube, SoundCloud, and even just using the free version of Spotify.
  14. macrumors member

    Sep 1, 2010
    I may be the anomaly of the future, but I don't like the idea of subscription music only because I like having full control of my library and knowing what I physically own.

    The thought of having a massive library at my disposal doesn't entice me. If I really want it, I'll get it. If I don't want it, I don't want it regardless of if I have "access" to it.
  15. macrumors 68020

    Nov 15, 2011
    woah woah woah, I think you're giving the macrumors crowd a bit too much credit ;)

    I agree with you though. I am horribly dating myself but I recall queuing up songs on napster back in '99 so my 28.8 (or was it 56.6 by then?) modem could churn away all night long. I remember the first CD I ever burned from songs I downloaded from napster (had to convert them to .wav first and then burn them) and how I went SHREAKING across the street to my friends house in my socks yelling "FREE MUSIC" and showing him the disc. :D

    My taste and methods for acquiring music have changed quite a bit since then. I went through a phase where I listened to A LOT of local music. When you do that, what happens is that A) the bands give you the music just for coming to the shows over and over or B) you *want* to buy it from them to help support what they're doing. Sometimes a mix of both happens.

    Now, what usually happens is that a friend or coworker will tell me about something that I haven't heard or whatever and they will let me listen to a copy (digital usually) of what they have. If I like what I hear, I go buy it to support the artist.
  16. macrumors 6502a


    Apr 12, 2012
    New York City
  17. macrumors G4

    Small White Car

    Aug 29, 2006
    Washington DC
    Well, no, I'm not usually going to rent a movie and then buy that same movie.

    But I will rent one movie and buy a totally different one.

    I see movies in theaters. I buy DVDs. I pay for Netflix. I use Redbox. I both rent and buy movies from iTunes.

    So when I look at this:

    ...I think, "Huh, I have no way of drawing that chart for movies. Does Netflix come before or after iTunes movies? Depends on what day it is!"

    So if it's impossible to chart out movies, what makes us think that music will go in a straight line with a beginning and end? Is music unique in that regard? What makes it different?

    Or will it end up a jumble too? Which kind of make all your speculation for naught.
  18. macrumors G3

    Jessica Lares

    Oct 31, 2009
    Near Dallas, Texas, USA
    Vinyl is selling more than CD now in some cases, BTW. How do you explain that?

    I like Redbox, and sometimes we use it, but Netflix is very good, and the price is more justifiable than a music subscription. You've saved a good chunk of money overtime. Especially with TV shows.
  19. nw9
    macrumors regular

    May 1, 2012
    I don't like idea of having to constantly pay for something that I can buy once and listen to as many times as I want. A rental or subscription service makes more sense to me for movies since most movies I only watch once. The ones I like watching several times I buy. With music it's different because there are many songs I like listening to many times, so it makes sense to me to buy them and create my own playlist that I have full access to.

    The other thing I don't like about these music services is that I need internet access to use them. I don't have a large data plan nor do I always have good internet reception at some places I go to. Most of my music listening is when I'm not home.

    Until the phone carriers provide cheap reliable data plans with high monthly limits or until they provide non-throttled unlimited plans, then anything that requires me to use more data per month regularly is not going to have me as a customer. I also like buying music to support my favorite artists.
  20. macrumors 6502a


    Apr 12, 2012
    New York City
    Spotify offline. Google that.
  21. macrumors 6502

    Nov 20, 2012
    They really need to. That's the one thing missing, the final piece of the puzzle. Paying full price for digital albums is extortionate, I would sooner buy the CD and just rip them down.
  22. macrumors 6502a

    May 3, 2011
    I prefer the subscription based music model over the pay to own model.

    It has potential to decrease piracy.
  23. nw9
    macrumors regular

    May 1, 2012
    From what I've read it's a limited offline mode feature. It doesn't seem I can create new playlists without logging back into Spotify. I would also need internet access the first time to get the songs and I would have to download a large amount to have a lot of songs available offline. I have a very large music collection and yes I listen to most of my music so I would have to download almost every song I like. It's much more convenient and faster for me to sync and import the songs from my Mac.

    I was also making a general statement about all music subscription services unless you are saying that all of them has an offline mode. Not everyone is going to use Spotify. I should've said not all of them has an offline mode.
  24. macrumors 6502a


    Apr 12, 2012
    New York City
    Rdio & Spotify are the best ones out right now and they both have offline. Before talking about the service & app you should definitely try them out. Spotify provides you with a 30 day trial & Rdio 7 days trial of premium (for both). Just give them a shot like I did and never looked back. This is the future of music.
  25. nw9
    macrumors regular

    May 1, 2012
    Spotify paid version cost $119.88 a year. That alone is enough of a reason for me to not use it. I don't spend that much money buying music in a year so it would cost me more. Also when I own the songs I can listen to them for free for the rest of my life. If you ever stop these subscription services, you will no longer have access to your music. You have to be a lifetime member to listen to songs you don't own. Some people are okay with that concept but I'm not.

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