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2015-06-09 07:30:19
Apple, having already transformed the music business once, is trying to do so
again
Jun 8th 2015 | SAN FRANCISCO
WHEN Apple bought Beats, best known for making bright-coloured headphones, for
around $3 billion last year, many wondered what the technology giant had in
mind. They now have their answer. On June 8th, Apple held its annual gathering
for software developers in San Francisco, where it revealed a new
music-streaming service, based on one it had acquired as part of Beats. Tim
Cook, Apple s boss, elected not to do a soft sell. It will change the way you
experience music forever, he promised. Revolutionary is how several others
described it on stage.
The new service, called Apple Music, is based on Beats , but takes it a few
steps beyond. It will be available at the end of June for Apple users, and
later this year on Android, Google s operating system for mobiles. In exchange
for a monthly fee of $9.99, people will have access to an unlimited number of
songs, which they rent instead of own. As predicted, the service pivots Apple
s music offering away from digital downloads, which it helped popularise with
the launch of the iPod music player in 2001. This trend is mirrored by the
music industry as a whole. Streaming revenues have been rising while downloads
have declined in recent years (see chart).
However, unlike with the launch of its iPod, Apple did not lead this musical
revolution. Instead, it is pushing into space occupied by other firms. The most
obvious encroachment is onto the turf of on-demand streaming services,
including Spotify, which has 15m paying subscribers globally. Apple Music will
attempt to differentiate itself from incumbents by having better curated
playlists that are hand-selected by people, not algorithms. Apple is also
trying to make finding new music easier. Eddy Cue, an Apple executive,
demonstrated how a user could verbally ask her iPhone what song was played in
the film Selma and have John Legend singing the theme tune within a few
seconds. Apple Music is also marching into the territory of SoundCloud, a firm
that makes it easy for freelance musicians to upload their works to the
internet, where they can be found by people looking to discover new artists.
Apple is taking on other giants, too. It was impossible not to think of
YouTube, Google s online video service, when Mr Cue showed how easy it was to
watch music videos through Apple s new service. Apple will also take on
traditional and internet radio. Beats One is a new global, 24-hour online
radio station, which will be accessible via the service. This station of
curated music will probably appeal mostly to music listeners who do not want
the hassle of trying to decide what to listen to. It has the potential to
influence musical taste globally, if it builds up enough listeners.
Apple s big announcement raises two questions. The first is whether the service
is truly revolutionary. The answer is that Apple Music draws together many
familiar and existing elements of other music services into one convenient
offering, rather than any new features in their own right. For record labels
and musicians, the service will not improve their fortunes dramatically.
Digital downloads are more lucrative than streams. Apple is likely to simply
convert people who used to pay for downloads into streamers, rather than
increase the population of those paying for music.
The second question is whether people are likely to pay for what Apple is
peddling. Apple has an estimated 800m credit cards on file as of 2014 and a
legion of committed enthusiasts who prefer Apple s user interfaces and devices.
It is not hard to imagine how Apple could soon dwarf Spotify s 15m paid
subscribers, once people sign up for the free three months that the firm is
offering and grow accustomed to using the service.
For Apple the biggest difference between 2001, when it launched its iPod, and
now is that the success of this music revolution will not determine the fate
of the firm. When it first released its iPod Apple was a computer company with
big ambitions. In 2015 Apple is the most valuable company in the world. It is
not only a technology company but a renowned luxury brand. In addition to its
music offering, today Apple announced other features that are designed to keep
customers within the firm s ecosystem of products, which include a wallet and
news-reading app. Apple Music, in other words, is just one small track in the
firm's much larger album.