Is Apple's App Store partly to blame for declining music sales?
In 2013, digital music sales declined for the first time since the iTunes Music store opened up for business in 2003. A common explanation for the decline is that consumers today have more avenues to listen to music for free. With services like Spotify, Pandora, YouTube and iTunes Radio providing on-demand music free of charge, it's easy to see why consumers might be less inclined to actually purchase music than they were a few years ago.
A Billboard report from a few weeks ago noted:
While industry executives initially refused to attribute the early signs this year of digital sales weakness to the consumer's growing appetite for streaming, in the second half of the year many were conceding that ad-supported and paid subscription services were indeed cannibalizing digital sale.
But might it be possible that there are other variables at play here?
Sure, the rise of subscription and ad-based music streaming causing a decrease in music sales makes for a simple equation, but perhaps there's more to the story than that. Recall that it's not just digital music sales that experienced a decline; overall album sales -- both physical and digital -- fell by 8.4 percent in 2013.
To this end, Horace Dediu of Asymco raises a particularly interesting point: Perhaps the recent decline in music sales is partially rooted in the simple premise that consumers today, with the advent of mobile app stores, don't have as much time to allot to music listening as they once did. Whereas music used to be the be all end all, it now has to compete with the likes of Angry Birds, Facebook, YouTube and more.
Consumers have a fixed time budget, a more rigid constraint than their spending budget. Competition for a slice of a consumer's time budget is far tougher than competition for a slice of a consumer's wallet. So what's amazing is that apps have successfully grabbed a share of this time budget.
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This is the insidious march of a disruptor. It gains a foothold in a context where it has no competition and then relentlessly gets better, eventually displacing the far better suited alternatives. This is what I believe is happening with apps. They are asymmetric in their competition with established media and as a result they are easily ignored and brushed off as irrelevant competition. That is until the incumbent media sees a sudden drop in consumption. Even then, the culprit blamed is not the upstart but some structural issue.
This is certainly an interesting and insightful take on things. As someone who spends upwards of 90 minutes each day enjoying the wonders of public transportation, I myself have noticed that apps have usurped some of the time I previously spent listening to music.
Before the advent of the iPhone, I had a trusty iPod filled to the brim with thousands of songs and a multitude of podcasts. Invariably, my morning and evening commutes were spent playing DJ to a party of one.
Once I got an iPhone, though, my commuting routine started to slowly, but surely, transform. Hours that were previously spent listening to music were now divided on account of apps like Facebook, a steady stream of addicting games, Twitter and more.
Of course, most apps can be used while music simultaneously plays in the background; nonetheless, I still found myself listening to music less frequently after finding it cumbersome to constantly switch over my music to forward past a song I wasn't interested in.
So while I do believe that the advent of streaming and ad-based music subscriptions is the primary cause of declining music sales, the notion that mobile app usage may also be partly to blame is certainly a novel argument worth exploring.
