Apps, Not Music, Are Future Of iTunes – Report

The amount of money made by app developers will exceed those collected from music downloads within the next three years. This is the conclusion made by a new survey entitled, “The app industry vs. the music industry,” by asymco.

Currently, Apple has paid out $16.6 billion to content owners utilizing iTunes. Of that, $2.5 billion has gone to app developers, while about $14 billion to music companies. However, those numbers (which show a 5:1 ratio) are actually deceiving.

iTunes: Cumulative Payments

iTunes: Cumulative Payments

By the looks of it, music sales far outnumber those of apps. But, those are cumulative totals. While music has been available by download for ten years, apps only came online in 2008.

Therefore, what really is important (going forward, anyway) is how the market looks right now.

For this, asymco looked at what Apple “keeps.” In other words, what the tech giant gets after paying developers and music providers.

On this count, Apple is currently bringing in $665 million per month. Of this, music generates only twice the income of apps; not five times the income as the cumulative total indicates.

iTunes: Monthly Income

iTunes: Monthly Income

They state:

But what should be more impressive is how quickly the app business is ramping. By the slope of the trend lines, it would appear that app income will exceed music income within three years. Therefore, it’s only a matter of time before apps generate as much income (exclusive of advertising) as music.

Another way to look at things is the number of downloads per device per month. Currently, this number is six apps downloaded per devices. Asymco could not determine the number of song downloads per month. However, it did calculate that each iTunes account has “consumed” about 67 songs, but also 62 apps.

Therefore, it summarizes that apps will eventually overtake songs within the App Store, stating:

All this data points again to the ascendancy of apps as a new medium. In a mere three years these digital objects have redefined themselves. They went from being tools to enhance the use of your phone to a new medium of expression and art. They have the ability to create a powerful economy of their own and will likely lead a profound shift in where value resides in mobile computing.

Of course, asymoco doesn’t take into account Apple’s upcoming iCloud service or iTunes Match program. Those services could actually increase music buying. Whether that would have an affect on Apple’s app business remains to be seen.

Still, no matter the breakdown, Apple, developers, and music producers are making a ton of money in iTunes.

What do you think? Leave your comments below.

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Apps, Not Music, Are Future Of iTunes – Report