Analyst: Apps are to blame for music sales drop, not streaming services

Digital music sales have declined for the first time since the iTunes Store went online, according to a recent Billboard report. Analyst Horace Dediu thinks he knows the culprit: apps. Dediu explains his reasoning in a new post on Asymco.

Dediu discounts the theory offered by Billboard that we're turning more towards streaming services like iTunes Radio, Spotify and Pandora instead of buying music outright. Instead, he thinks that faced with limited amounts of downtime, we're more likely to fire up an app than we are an album.

Downtime or "boredom" was filled with app interaction. This includes some social media consumption. These are not immersive experiences. They are "casual", inconsequential and trivial. At first anyway. And that's the rub. As apps enter a consumer's world they initially take on non-consumption, which is easy to beat. But as the experiences become increasingly compelling they "move upmarket" and compete more aggressively with existing media consumption patterns.

It's an interesting theory.

I don't think it's just apps - I do think that streaming services are cutting into music sales, and music industry executives agree. Just anecdotally, around my house, my three kids - teenagers all - listen to their music almost exclusively on streaming services, only very occasionally downloading music they want to hear. In another lifetime, they would have been the principle consumers of new music in our household - the ones more likely to spend disposable income on records, tapes, CDs and eventually MP3s. But that's changed because the way that content is being delivered to them has changed.

Even I've found iTunes Radio to be a palatable and preferable alternative to listening to my own library. I still buy music, and have a huge library of my own, but I've set up a few custom iTunes Radio stations that I really enjoy to listen to when I'm out for a drive. It beats the dross on the radio, and as an iTunes Match subscriber, I don't have to deal with ads. What's more, it's exposed me to new music I want to hear.

There's little question that we also fill our idle moments with other activity. Even sitting on the couch when there's a TV show I want to watch, I usually have the laptop perched on my lap or have an iPad in hand, playing a casual game or checking email and social media - along with everyone else in the living room watching the show with me.

I'll agree with Dediu about one thing without reservation: There's no question that these devices and the app ecosystem that supports them have fundamentally altered the way we spend our leisure time. For better or for worse.

How about you? Are apps the new music downloads? Have you switched to streaming services instead of buying your music? Sound off in the comments.

Source: Asymco