Rumor: Apple making longterm plans to retire music downloads? (Update: Source doubles down)

Rumor: Apple making longterm plans to retire music downloads? (Update: Source doubles down)

Apple has been making plans to completely eliminate music downloads on the iTunes Store, according to a new report from Digital Music News. Sources “with close and active business relationships with Apple” have told Digital Music News that the company is actively considering a two-year termination timetable, and discussions within Apple have begun focusing on not if purchased music downloads should be retired for good, but rather when it’s going to happen. A range of shutdown timetables are apparently being considered by Apple, with executives suggesting that the company no longer expects to run the service indefinitely, although it may ride out iTunes music sales for a few more years until paid music downloads are eclipsed by “a streaming-dominated industry.”

While it’s unclear exactly why Apple would want to kill off a profitable business market — music industry analysts expect that iTunes music download revenue will still be around $600 million in 2019 — there may be concerns within Apple that the availability of digital download sales are limiting the success of the Apple Music streaming service by providing iTunes and iOS users with options, and that the overlap between Apple Music and the iTunes Store is creating product confusion, both in terms of purchasing products and in the combination of other overlapping services such as iCloud Music Library and iTunes Match. Further, despite the revenue from digital music sales, analysts suggest that music purchases in this form are in rapid decline, dropping by 15 to 30 percent year-over-year, suggesting that Apple may be planning a proactive exit strategy in a world that’s moving progressively more toward streaming services.

Update: A two-word refutation from Apple, as spokesman Tom Neumayr told Re/code that the report is simply “not true.”

Update 2, 6/8/16: Digital Music News is standing firm with its 2-3 year timeframe for Apple phasing out iTunes downloads, saying that sources with knowledge of the company’s plans are still adamant despite public denials. The site claims music downloads have entered a “free fall” this year and the decision to finally pull the plug on music download sales will depend on how sharply sales decline, how quickly streaming accelerates and the internal politics at Apple. It’s interesting that the site is doubling down despite Apple’s firm denial after the initial report was released — there’s a good possibility that factions inside Apple may be split on this issue.

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