A streaming milestone: Spotify overtakes iTunes in Europe

Downloads are dead, long live music streams. Photo: Kobalt/TechCrunch

If you’re searching for further evidence that music streaming is overtaking downloads, look no further than a new report claiming that over the last quarter European revenue from Spotify streams were 13% higher than revenues from iTunes downloads.

The report comes from Kobalt, a company that helps collect music royalties on behalf of thousands of big-name artist. Currently it only collects earnings from Spotify streams in Europe — which means it’s unknown if similar figures are true in the U.S.

This time last year, iTunes’ earnings were 32% higher than that of Spotify in Europe, although streaming revenues have tripled over the past two years.

This goes hand in hand with a recent report by the Wall Steet Journal, suggesting that iTunes music sales are down around 13% this year.

“Spotify overtaking iTunes in Europe is an important new milestone in streaming,” Kobalt CEO Willart Ahdritz told TechCrunch. “The music industry’s infrastructure is failing them, unable to efficiently account for the enormous volumes of data from digital transactions.”

While this is bad news for Apple, it’s also not unexpected. In Apple’s recent annual 10-K earnings report, the company notes how the rise in app sales in the iTunes Store was partially offset by a decline in digital music sales.

Going further back, it is possible that seeing the writing on the wall for digital downloads was part of the reason behind Apple’s $3 billion acquisition of Beats, since it included the Beats Music subscription service.

Although Beats currently lags behind other streaming music services such as Spotify and Pandora, it does open up new possibilities for Apple.

There are reports that Apple will rebrand the subscription service in February, ditching the Beats Music name so as to keep Beats a hardware-only brand and bring the Beats Music technology under the Apple banner. Apple is also reportedly lobbying music labels for extensive price cuts that would bring the cost of a Beats Music subscription from its current $10 price point all the way down to $5.

The world may be headed away from downloads and toward streaming, but Apple does seem to have a plan.