“Spotify and others have quickly created a streaming music market that has resulted in Apple iTunes being increasingly considered yesterday’s way of consuming music,” Gary Bourgeault writes for Seeking Alpha. “For now the music business won’t have much of an impact on Apple’s top and bottom line either way, but over time the threat is if it is no longer considered a market leader in a number of categories it competes in, which means consumers could choose not only other services, but more importantly, other devices to consume content with.”
“It’s already having an impact on its bargaining power, as it recently was refused a request during negotiations with the music industry to lower its licensing costs, as the New York Times reported,” Bourgeault writes. “That suggests Apple no longer has the negotiating strength it has had in the past; that means in the area of music streaming, it won’t have a competitive edge in pricing, unless it decides to lose money to scale its streaming business out, while its smaller competitors are forced to lower prices in order to compete.”
“It’s important to watch how Apple responds to the streaming music market, and other streaming subscription markets, as that is the future, and how it positions itself competitively will determine its long-term performance,” Bourgeault writes. “At this early stage of the streaming subscription game, Apple has fallen behind. It must work hard to change that in the near future, or it could lose the future, in regard to its gadgets, which is of course where the company makes its real money.”
Read more in the full article here.
MacDailyNews Take: The streaming music market is fragmented among a bunch of smaller players. It is a nascent market. With a competent product, built into hundreds of millions of devices, Apple will have no problem quickly becoming the world’s preeminent provider of subscription music.
Furthermore, describing Apple’s iTunes Radio as a “failure,” as Bourgeault inexplicably does in his full article, is ridiculous. Launched just 18 months ago and only in two countries (United States and Australia) so far, iTunes Radio is certainly no “failure.” In fact, according to research released this month by Edison Research and Triton Digital: