“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.
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.
What BizLaw said ^
😀
Not to mention the millions and millions of iPhones and iPads and Macintoshes that will have Beats pre-installed.
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.
If Cybart wants to bet against Apple, I’ll take the bet.
Apple was late to the MP3 game with the iPod too…
They learned from all before them how and what to do right in order to reign supreme.
Some big analyst or something from the cable industry was saying the exact same thing about Apple an television on Bloomberg today.
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.
“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.
Classical is one genre where the streaming music system has failed miserably.
“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).
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.
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.
Interestingly, Joanna Stern at the WSJ, thinks the iPhone has met its match in the G6 and that its great. Not sure what she’s smoking but she said she isn’t giving up all of her iOS devices or Macbook http://www.wsj.com/articles/samsung-galaxy-s6-review-the-iphone-6-has-met-its-match-1427825674
DOH! Sorry about that – obviously the wrong article!
Because some people are just stupid and as long as their Twitter tweets it’s all the same to them.
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.
Ditto.
Make a suprior product and people will sign up !
And there is no shortage of apple users !
Other headlines from the past:
Apple is late to the MP3 music player game; strategy looks increasingly risky
Apple is late to the online music store game; strategy looks increasingly risky
Apple is late to the mobile phone game; strategy looks increasingly risky
Apple is late to the tablet device game; strategy looks increasingly risky
Apple is late to the television game; strategy looks increasingly risky
Are there any things that Apple tackles that aren’t risky? Does this pundit think that Apple got to be at the top of the heap by being risk adverse?
There’s no streaming service that I would ever use. The free stuff is full of Ads. The paid stuff is either someone else’s playlist that I’m not interested in, or it has some artificial intelligence that figures out what you like – and today, it doesn’t do a very good job. After you tell it what you like, it finds songs that are similar, but it plays about one good one per hundred, and many of the ones it plays are the ones you told it you like. Plus you don’t end up owning the music. If you’re not really a critical listener and don’t want to fool with your own library, it’s OK I guess. But personally I don’t think it will ever supplant the buying of music you like, so you have it as long as you want, and can manage your own library and playlists.
I personally am NOT transitioning to streaming. I OWN my tunes and keep them. Having to pay money to hang onto viable tuneage is NOT going to happen on my gear. Casual streaming for the purpose of BGM (background music) and learning new tunes is great! Seeing as terrestrial radio is almost 100% corporate crap, having control over streams I hear is a terrific improvement! Exposure To The New! But it’s not where my money is going. When I like something I hear, I want to buy it and keep it.
IOW: Have fun, if forking over money forever for the rights to your tunes is what you want. It’s not what I want.
I thought Apple was a watch company
iTunes music was designed to sell Apple hardware, I don’t see them having any problems moving hardware these days. The Spotify app still runs best on an iPhone. I hope the new Beats streaming service knocks it out of the park, but it doesn’t have to. iPhone is king either way.
This sounds vaguely similar to the “we’ve spent time figuring out how to make a good phone. PC guys are not going to just walk in” drivel back in 2007. The iPod was not the first mp3 player, the iPhone was not the first cellphone, the Apple Watch won’t be the first smart watch…and, in the long run, what has it mattered? It’s doing it RIGHT that matters, not being the first one to market.
Apple is way earlier to the streaming music market than to the cellphone market – how’s the weather in Espoo?
I just don’t have the time. During the work day I like the radio as I like having a sense of where I am in the day. I don’t want to get lost in something then find I have a load of stuff left to do and not much time to do it in. I also listen to a lot of podcasts when I’m commuting and in my free time, as well as my existing music collection. At other times I watch movies and TV, plus I try and find time to read as well, and that’s before you even factor in using computing devices recreationally. It’s just very hard to justify spending more money on any service that I barely have the time for.
Apple has never been the first at anything. Apple was said to be late to the mp3 player game and then Apple struck down the competition with the iPod and iTunes store. Same with the iPhone and the iPad. Being first is not what wins customers. Being the best and most useful will win the market. That’s what Apple does best, never first.
I don’t agree that this is a ‘rare’ case of Apple ignoring a product too long. Just look at the email IMAP fiasco, now screwing sys admins and enterprise clients for two years, despite Cook and Federighi publicly promising to make it work.
Not to mention that they were really late to the cellphone market. How’d that work out for them?
Pretty well actually.
I mean I prefer Android myself because I like the OS better but Apple revolutionized the industry with the iPhone.
Do you still see people using Nokia flip phones in 2015?
Does your phone have a sarcasm detector? It could totally use one. 😉
It’s not a matter of being early or berng late to a field, It’s a matter of being right in one’s decision and implementation.
“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.” —MDN
Terrible suggestion. The world needs less cheesy promotional clutter, not more!
I don’t see the point of paid music streaming. Especially when services like Pandora are free.
If I’m going to pay for music, I’m going to pay for it only once and download it.