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Is There Even a Future for Apple's iTunes Store?

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In a world where owning music is quickly becoming a thing of the past, big companies are having to figure out the next step.

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Now, more than two years after Apple finally landed the Beatles, with no more worlds left to conquer, it finds itself lord of an empire that's perpetually under attack even as it keeps growing. The latest quarterly sales for the iTunes Store, including movies and apps in addition to music, totaled a record $2.1 billion, and the iTunes music store now reaches 119 countries. But as analyst Horace Dediu pointed out earlier this month, music, movies and the like still account for two-thirds of all iTunes sales, but the growth there has fallen far behind the growth in revenue from apps. Maybe that's why Apple is constantly rumored to be working on its own streaming music service.

Caught in the middle of these fast-moving trends are the artists in a debate that has raged all the way back to the days of cassette tapes. But with the exception of the upper echelon, record sales have never been a huge driver of revenue for artists, who make most of their money from live performances and merchandising. The line from industry executives that bootlegging was stealing from your favorite artists would have been more accurate if it had said, "You are stealing from the kid who gets the A&R guy's coffee." It's hard to feel much sympathy for the collapse of an industry so bloated and corrupt.

While the old structures collapse, bands like Radiohead and Nine Inch Nails have proven that in the modern age, record labels are unnecessary. On the lower end of the scale, some indie bands are finding the self-publishing model to be effective and profitable. Granted, they lose the promotion and tour support that the labels can provide, but history has proven that arrangement to typically be Faustian. Life without labels is somewhat more problematic for jazz and classical artists, where the mechanical royalties are basically the only paycheck the performers will ever receive.

Starting in 2012, in an effort to remain relevant, Billboard began to integrate digital downloads and streams into the reckoning for Top 40 placement. This led to a year when hip-hop was replaced on the charts by oddball viral hits like Fun's Queen-esque "We Are Young," Goyte's "Somebody That I Used to Know" and the ubiquitous "Call Me Maybe."

So it's not hard to look at Apple as the king of a lonely hill. In 10 years, digital music stores may seem as antiquated as pagers, travel agencies, and dial-up Internet.

Editor's Note: This article by Josh Herr originally appeared on The Fiscal Times.

For more from The Fiscal Times:

8 Iconic Apple Products


Social TV: 6 Apps That Will Transform Television in 2013

iChildren: How Apple is Changing Kids' Brains

Follow The Fiscal Times on Twitter: @TheFiscalTimes.
No positions in stocks mentioned.
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