“This isn’t a fanboy assessment of AAPL or its positioning in the music space,” Dallas Salazar writes for Seeking Alpha. “I’ll acknowledge that Spotify, the Unicorn that is close to becoming a Decacorn, does stand to be a hurdle on the way to AAPL yet again revolutionizing a platform and yet again being the single most dominant force in a space.”
“Just one day post-WWDC15, Spotify closed a Series G round worth $526 million that values the company at $8.53 billion – up from a prior valuation of $8 billion. That’s 2X current Pandora’s valuation and ~3X what AAPL paid for Beats By Dre,” Salazar writes. “So, to think that Spotify is going to fold up and go away is to not realize the reality of the situation. Spotify is smart, it’s agile, it has 60 million users (15 million or 25% of which have been converted to paying subscribers), and it did $1.3 billion in full year 2014 revenues (91% subscription revenue based). Spotify is real and it matters. BUT, Spotify did report a net loss of $197 million and that my friends is its chink in its armor.”
“AAPL will gut and publicly execute Spotify using two methods – creating a race to zero (read: pricing pressure) and having a better content distribution platform for music,” Salazar writes. “How long will Spotify investors continue to throw money into a fire of greater and greater size when AAPL undoubtedly decides to put as much pressure on Spotify’s model via lower pricing, longer free trial periods – which already stand at 3 full months, etc.? How long? How long will it be before AAPL can example to the music industry the greater levels of efficacy of using its platform and its unique ability to allow for free video and/or music to be distributed without cost to the artist/label/consumer via its Connect platform? How long?”
Read more in the full article here.
MacDailyNews Take:
Oh ok. – Spotify CEO Daniel Ek upon learning of Apple Music, June 8, 2015
We are not at all worried. We think we’ve got the one mobile platform you’ll use for the rest of your life. [Apple] are not going to catch up. – Microsoft Mobile Communications Group Product Manager Scott Rockfeld commenting on the iPhone, April 01, 2008
SEE ALSO:
Spotify CEO claims to be ‘ok’ with Apple Music – June 9, 2015
Jimmy Iovine and Eddy Cue: Apple Music gunning for Spotify, YouTube, and terrestrial radio – June 9, 2015
Something about Apple Music betraying Apple’s brilliance by ignoring ‘The Harry Potter Theory of Marketing’ or some such nonsense – June 9, 2015
Bob Lefsetz on Apple Music: What team is Jimmy Iovine on? – June 9, 2015
Apple Music’s huge advantage over Spotify – June 9, 2015
Apple Music is a major mess and it won’t beat Spotify or something – June 9, 2015
When Apple Music arrives, what happens to iTunes Match? – June 9, 2015
What Apple Music says about how Apple views musicians – June 8, 2015
Apple’s revolutionary Apple Music just might prove its skeptics wrong – June 8, 2015
Apple unveils revolutionary Apple Music service – June 8, 2015
I buy about twenty iTunes Audiobooks every year….I wonder if Music will include access to audiobooks?
That would be sweet.
spotify is scurred
Spotify will do just fine – last I looked, there were more people using Windows and Androis than Apple equivalents.
Apple doesn’t need to detroy everything in their path, lile MS tried to do.
Competition is a good thing, spurs innovation and lowers price.
Apple does not need to intentionally try to destroy Spotify, but it does not mean that the latter will be fine.
Their business model only brings losses, and their hope was and still it that their paid subscription will blow up to much bigger than current 20 million number, and then the company will start to become viable.
The issue is it is not clear if they will be able to grow that much before investor will tire to cover their losses.
Those Spotify users can always buy into Amazon, they have such a high ceiling profit wise. 😉
I am not (yet) a big fan of Apple Music, but Spotify is dead meat.
Spotify is already losing money with their business model– more subscribers won’t fix that. This is BEFORE Apple even enters the market. Spotify has no other cash cows to subsidize what their doing.
Apple, on the other hand, can afford to run Music at break even or even a loss indefinitely.
Apple Music will be available on both Windows and Android.
This is just getting childish. Apple and Spotify can both exist – the market is large enough to support many services. Neither have to win or lose over the other to be successful.
After looking at the craptastic mess Jimmy Bovine stammered about in a daze/haze at WWDC, I decided to give Spotify a trial that costs 99 cents.
(Just noticed Apple effed up special characters by combining them with the stupid emoji bullshit and eliminated the favorites- nice work Jony- please retire soon.)
It is not Apple software for sure. It is not burdened with a blizzard of blinding white and ugly unlabeled cryptic icons. It actually works as designed. It also seems to have a higher quality sound than the Apple music on the same tracks. I am quite sure the view is not colored by my Focal monitors or my Bowers & Wilkins Headphones.
Too early to make a final take, but it is not bad. Some tracks I have in iTunes Match it does not have, but it also has tracks iTunes does not have. And in the latest Apple beta fashion, iTunes told me I did not have permission to play supposedly non-DRMed tracks downloaded from iTunes Match. Apple under Cook has went from it just works to the land of the eternal Beta.
Time Mr Cue took that ugly shirt off, stopped doing Karaoke and got about the business of fixing Apple’s music franchise.
Apple is the best company on earth and has the best products and services but that still isn’t good enough for you. What would it take to ever make you satisfied?
How perfect are you? Did you ever accomplish anything in your life?
Not sure about the best company on earth nor should you be. Apple is drifting without a unified vision- a not uncommon thing after the founder leaves or dies.
Cook is undoubtedly a smart guy, a hard worker and a more or less caring CEO, but I am not sure he has the instincts to keep Apple from becoming Microsoft.
Accomplished troll.
Troll cop alert!!!!!!
Troll cop, cop alert!!! 🙂
You are an accomplished toll, or do you wish to be an accomplished troll?
As long as Eddy Cue is responsible for Apple Music I don’t think Spotify has anything to worry about.
Family sharing up to six members is the best deal ever!
Why is this necessary? (The title) The prices are cheap enough especially when it comes to a Apple people. So why not have both services. Even more. At 10 dollars we can afford to buy a lot of services from a lot of different companies. More then ten dollars, forget it. Cable companies 10 is enough for you too.
Apple music is like Sharpton. A terddieterd term.
I’ll definitely try Apple Music. The keynote really didn’t explain much, so I’m keen to try it myself. See how it really works. I’m hoping it’s better integrated across features and music sources (streaming, personal, purchased, and iTunes Matched catalogs) than that mess of a keynote.
I use Spotify. It does what it does and that’s probably enough to keep their users. Apple users will expect a better (more “delightful”) experience. They won’t put up with a bunch of bad, no-name cover versions from a song search.
They’re giving us 90 days to try it. I rejected Beats in 7….
asdf
It all depends on the music catalog. If you listen to the shit that appears in award shows, maybe apple will be for you. If your tastes are more sophisticated, Spotify is the way to go.
Could you be a little more vague?