Spotify Surpasses iTunes in Europe

Spotify Surpasses iTunes in Europe

Not everyone wants to "own" music

With revenues from streaming music services skyrocketing while digital music sales are falling, it was only a matter of time before Apple's iTunes was outpaced by more modern ways of consuming music. And so it goes: According to Kobalt, a music publishing service that represents over 6,000 artists, European earnings from Spotify have overtaken those from iTunes.

"Spotify overtaking iTunes in Europe is an important new milestone in streaming," Kobalt founder and CEO Willard Ahdritz said in a prepared statement. "What Kobalt offers to artists, songwriters, and publishers has become more important than ever as the music industry's infrastructure is failing them, unable to efficiently account for the enormous volumes of data from digital transactions."

Once seen as a savior for the music industry, iTunes has never been able to make up for falling unit sales or revenues in traditional music formats like CDs. But with Steve Jobs infamously declaring that "people want to own their music," Apple was also slow to embrace subscription music services, which provide consumers with access to 10s of millions of songs for a set price.

It's unclear what it even means to "own" digital music, but consumers are waking up to the benefits of the alternative: A typical music subscription service, like Spotify, typically costs less per month than buying a single album on iTunes.

Kobalt doesn't represent the entire music industry, of course, and certainly Europe isn't the world. But these trends have been telegraphed over the past few years as iTunes first peaked and then declined by double digits this past year. During 2014, revenues from streaming music services jumped almost 30 percent in the United States, and "total streams" on these services are up 46 percent.

As for Kobalt, it reports that iTunes royalties for its artists had outpaced those of streaming services by 32 percent in mid-2013, but that the gap had fallen to 8 percent by the beginning of this year. This year, global streaming royalties overall—including those from subscription services, YouTube, and Internet radio—have tripled and surpassed those of iTunes. And as noted, Spotify, the most popular streaming service, is now beating iTunes in Europe.

Seeing the trends, Apple belatedly launched iTunes Radio in 2013, but the service was met with ambivalence by the company's normally ardent fans. So Apple purchased Beats, and its well-regarded Beats Music subscription service-in May for an astonishing $3 billion price tag. The firm has yet to integrate Beats into iTunes, and still maintains it as a separate service.

And for its part, Microsoft of course offers a competing Xbox Music service with Xbox Music subscription. But don't tell anyone. Microsoft certainly hasn't.

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