Apple might be late to the streaming music party, but that doesn’t mean the company won’t succeed in the market.
In fact, quite the opposite. There were plenty of smartphones before the iPhone, plenty of tablets before the iPad, and you can bet that Apple Watch is going to trounce earlier wearables when it arrives in a couple of months.
Apple has always been clear in its intention to be best rather than first. It stands to reason that this applies to its upcoming streaming music service, too. While Erik put forward that Apple can conquer streaming music without innovating, I believe, in light of more recent revelations, that Apple has a number of pieces already in place that show it is about to dominate streaming music.
iTunes
iTunes is a recognizable brand in its own right and many companies would kill for their whole business to be the size of Apple’s iTunes. Written into the consumer consciousness since the earliest days of the iPod, the iTunes name is globally renowned having been the go-to store for digital music purchases for over a decade.
Spotify, Rdio and Google Play Music all have strong brands — but none have the weight of Apple and iTunes behind it.
Rebranding the Beats Music service it bought as part of that $3 billion deal came as a shock to some, but with a popular, young music brand only garnering around 100,000 paying subscribers, it’s perhaps easy to see why an Apple-branded service might have more heft.
It’s not just about the iTunes brand, though. While that might make it an easier sell to customers, the fact that Apple has over 800 million credit cards on file through iTunes and that the software is available in 150 regions is where it stands to crush the competition. By comparison, Spotify’s 15 million paying subscribers in 60 countries looks paltry.
If 5% of Apple’s iTunes customers sign up for its new streaming service it could decimate the competition over night. And you know Apple’s going to make it easy for anyone with an Apple ID to subscribe.
iOS integration plus iTunes and Android
iTunes 2015Apple’s streaming offering will reportedly be “deeply” integrated with iOS. Apple just sold its 1 billionth iOS device last quarter. Think how large Apple’s addressable market is for this service and if anyone knows how to play the ecosystem card, it’s Apple.
Integrated into the Music app on each and every iOS device, available through iTunes on the desktop and an Android app under development, Apple is making sure that everyone who could want to subscribe is able to.
Beats Music’s tech and talent
When Apple bought Beats, it didn’t just get a fashionable headphone maker and new streaming music service. It brought in a number of talented individuals and some invaluable technologies.
One thing that makes Beats Music interesting is its emphasis on curation and recommendations. Using a unique blend of algorithms and human music curation, Beats’ playlists are second to none. It’s this human touch that makes using the service so enjoyable and you can bet Apple’s future streaming service will be built on this.
As for talent, bringing on board Beats co-founder Jimmy Iovine and his wealth of industry knowledge and experience could be the biggest intangible asset of that Beats buyout.
He is the man that will help Apple pitch the new service to industry execs, labels and artists and, crucially, allow Apple to secure exclusive content for its new service. With Taylor Swift recently pulling her catalog off of Spotify, it’ll be Iovine that convinces artists that Apple’s service is not only worth being available on but also worth being exclusive to.
While I don’t expect Apple to be buying exclusive rights to a artists’ music catalogs or signing them to its own label any time soon, as Josh Constine at TechCrunch theorizes, I believe exclusivity will be key for getting customers on board.
Remember Beyonce’s iTunes exclusive album became the fastest selling in iTunes history? Expect more of that kind of thing with the new streaming service.
Social
Pour one out for Ping. Perhaps it was ahead of its time, perhaps it was just a terrible idea, but it seems like Apple hasn’t given up on the social aspect of music.
The new streaming service will be social, according to reports and evidenced by the company’s recent purchase of MusicMetric makers Semetric. Beats Music has a lot of social features that will be rolled into the new Apple service allowing users to follow friends and musicians and discover new music that way.
Further, having key analytics data on the sales, streams, illegal downloads of music as well as social media attention will be highly useful for artists and labels.
Price
Absolutely key is price. While Apple likes to retain its price margins on its hardware, it has been happy to undercut its competitors in the software department time and time again. Apple was reportedly shooting for a $5/month subscription for the Beats-infused Apple streaming service but is now said to be settling on $7.99. This is still less than the $9.99 of other services.
By offering a unique service that is easy to sign up for, integrates with all of your devices and your current music library, offers exclusive content, and is cheaper than the alternatives, I think you have a very attractive prospect there for customers.
Does this spell the end for for Spotify, Rdio, Google Play Music, Pandora and others? No, just as the iPhone didn’t spell the end for all other smartphone makers. Each music service will begin appeal to different users based on product features, interface, music catalog, curation, availability, price, and many other aspects.
As with the smartphone market, there is more than enough room for more than one player. However, by winning in a number of these crucial areas, I feel Apple is about to become the biggest.
