According to a report by the Wall Street Journal, sources at Apple have confirmed that the company’s iTunes digital music store has taken its biggest hit in history. In the first quarter of 2013, numbers by Nielsen highlighted a 13 percent plummet in digital music sales, which saw their first year over year decline in 2013. Last year, a 3.1 percent decline over the course of the year was enough to have the industry spooked, and that trend appears to be accelerating, and making a major impact on Apple, the world’s biggest digital music retailer.

When Apple announced that it would buy Beats in May, speculation about the iPhone maker’s plans for the company abounded. Beats is part hip headphones brand (Beats Electronics) and part nascent streaming music service (Beats Music) remixed out of MOG, which it acquired in 2012. It seems clear, well into 2014, that Apple’s fears for its digital music empire aren’t unfounded. The company that created the digital music revolution with products like iTunes and the iPod was slow to warm up to streaming music, and still doesn’t have a proper competitor to popular streaming services like Spotify (which struggle to balance subscription fees and monetization with royalty costs).

It’s clear that Apple has big plans for Beats (the app). The company is expected to relaunch Beats under the banner of iTunes next year. Whether Beats will be rebranded altogether remains to be seen, but given how out of touch Apple has grown with an industry that it created to begin with, the company would be well served to cash in on all the cool it can—particularly after its misfire promoting a decidedly not cool U2 album.

H/T The Wall Street Journal | Photo via janoma/Flickr (CC BY-SA 2.0)