The way we consume music has changed over the years, where it used to be we would be physical copies of music in the form of vinyl, cassette tapes, CDs, and so on, before we moved into the digital age where we would buy digital singles and albums. In more recent times, it seems that music streaming is the new form of delivery.
However it seems that while music streaming is on the rise, it might not necessarily be as profitable as one would think. This is according to Jimmy Iovine, the head of Apple Music and also an industry veteran. Speaking to Bloomberg in an interview, Iovine suggested that music streaming services have little to no margin, and that streaming services aren’t actually making money.
“The streaming services have a bad situation, there’s no margins, they’re not making any money.” He also claims that services such as Spotify could be in trouble because unlike Apple or Google or Amazon, they don’t sell anything else. “Amazon sells Prime; Apple sells telephones and iPads; Spotify, they’re going to have to figure out a way to get that audience to buy something else. If tomorrow morning [Amazon CEO] Jeff Bezos wakes up and says, ‘You know what? I heard the word “$7.99″ I don’t know what it means, and someone says, ‘Why don’t we try $7.99 for music?’ Woah, guess what happens?”
He adds,“The streaming business is not a great business. It’s fine with the big companies: Amazon, Apple, Google… Of course it’s a small piece of their business, very cool, but Spotify is the only standalone, right? So they have to figure out a way to show the road to making this a real business.”
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