Apple is late to the music streaming game; strategy looks increasingly risky

“Apple is late to the music streaming game,” Neil Cybart writes for Above Avalon. “In what could be seen as a rare sign of Apple ignoring a product for too long, Jimmy Iovine and company are still putting the finishing touches on their shift from paid downloads to paid music streaming. While Apple will most likely have a specific marketing plan in place to become the biggest paid music streaming service in the world, the overall risk to the strategy remains elevated. Being forced into something is a new experience for Apple and one has to wonder if becoming the most popular paid music streaming service is just a near-term prerequisite for a company with much bigger music initiatives.”

“The sea change in music continues unabated. Paid music sales are declining as music streaming is growing in popularity, built primarily on a freemium model where advertisements are used to annoy listeners to the point of driving paid upgrades,” Cybart writes. “Spotify has 15 million paid members, equivalent to less than 5% of the overall iPhone user base, while YouTube serves billions of songs, masked as videos, for free. In such a volatile landscape, Apple’s rumored plans for music streaming seems rather simple and, to a certain degree, refreshing. One tier, charged at a monthly rate, with users able to listen to music across a range of products and even operating systems.”

Cybart writes, “Apple is being forced into music streaming and the question remains if Apple can once again harness the music industry in a such way as to form a strong enough stepping stone to begin mapping where the music puck is headed.”

Read more in the full article – recommended – here.

MacDailyNews Take: This is taking Apple quite awhile, certainly longer than they like, but Iovine is a force to be reckoned with in the music industry. If they want to dominate in music (and they may not fell it’s a necessity at this point) Apple would do well to utilize a tiny portion of their mountain of cash to provide clear and compelling reasons (exclusives, promos, contests, prizes, concert tickets, etc.) for customers to sign up for a monthly iTunes Music subscription music service.

36 Comments

  1. First, Apple is not shifting away from paid downloads of music. iTunes will still be there and will be improved and expanded.

    Second, streaming music is still in its relative infancy. No on has really struck on a good business model yet, at least not one which resonates with a large number of consumers.

    Finally, Apple is never too late to any market it chooses to enter, because Apple only enters markets where it can implement a massive change in behavior to the benefit of consumers. Another iTunes Radio offering doesn’t fit into that category. I have a feeling Iovine has a major vision for something completely different, and it’s simply taking Apple time to get the software right.

    1. I agree.
      Also note that streaming music will mean different things to different people. I stereotype here but teens may well use streaming music so that they can listen to the current hits without having to buy the songs.
      I personally (not being a teen for a very long time) am more interested in discovering new music and being able to buy songs I like on the fly. The ability to quickly buy a song via my phone makes it very easy to add to my collection and find bands I can get more into. Therefore the combination of streaming plus a store is extremely useful for me.

  2. I’d love to think that a streaming music plan fits into what I want but it hasn’t and it probably won’t so I probably won’t regardless of who comes up with whatever they come up with.

  3. “built primarily on a freemium model where advertisements”

    can’t really listen to music with advertisements
    especially for stuff like slow jazz or classical.
    worse they ratchet up the sound when ads come up.

  4. “Risky”? That’s nonsense. Apple profits from selling hardware, not by offering services. For example, Apple Pay may become profitable, but that’s not it’s purpose. If the goal for Apple Pay was to be profitable, Apple would have maximize its audience by include Android users. Instead, Apple Pay is a value-added service exclusively for iPhone (and Apple Watch) customers, to enhance and differentiate their user experience.

    There is absolutely no risk here, because streaming-music service providers are already supporting Apple’s platforms. Apple does not care so much if customers are using iTunes Radio, Beats Music, or some other non-Apple service… As long as they are doing it on an Apple device.

    Apple is NOT being “forced” into something; Apple has the luxury of taking it’s time. When Apple does release its final streaming music service, it will be uniquely better than anything else available. AND (unlike iTunes Radio and Beats Music) it will be exclusively for customers of Apple’s hardware (just like Apple Pay).

    1. This is pretty much what I was going to write. And I don’t think there’s as much of a case for being the leader in music sales/streaming. Apple has more revenue in three weeks than the *entire* worldwide music business has in a year.

      As long as they have a reasonably competitive offering, it doesn’t hurt or help their business all that much.

  5. Apple was late to the mp3 player game. Apple was late to the tablet game. Apple is late to the enterprise game. Apple was late to the cell phone game in general and the smartphone game specifically.

    This has not seemed to be a huge problem.

    FD: Long AAPL and staying that way.

  6. I haven’t caught up to streaming music, so maybe I shouldn’t be adding my 2 cents worth. I have a library of 8000 plus, not giant, but it is 22+ days worth, and it’s all MY music, songs that I certainly don’t mind hearing. I have been buying cassettes and albums and downloads since the 70’s. Songs play In my car via bluetooth, in the house thru airport/airplay and I love it. No DJ’s and no ads…. to me its perfect. I bought the 64 gig iPhone just so I would have enough room for iTunes. There isn’t much new music I like so I don’t think I would benefit much from streaming. It is possible that sometime in the future I could be streaming, but it’s gonna take a real sweet deal to capture me.

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