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Why music streaming may not make sense for Apple

Posted by Ian McKee on 30th January 2013

iTunes Vs SpotifyIt’s a big rumour for Apple this year. Analysts are predicting that the tech giant is gearing up to launch a first foray into music streaming.

It seems to be taken as a given that Apple will have to move into this space at some point. It’s where music is going: services like Spotify, Pandora and Deezer are all eating into iTunes’ dinner, aren’t they?

But it doesn’t seem that straightforward to me, so I thought I’d present a few reasons why it may not be such a great idea.

Steve Jobs wasn’t into subscription services

Of course, the real ‘second coming’ of Apple rolled out of the launch of iTunes and the iPod in the early 00s. Music is very much a core part of the Apple DNA.

However, it isn’t a technical coincidence that iTunes launched as a pay-per-download service. Subscription services launched by the record companies had actually existed already, and Steve Jobs was pitched subscription services, flat out turning the idea down.

Jobs felt that people didn’t want to fork out $10 or so a month to ‘access’ their tracks, feeling that people have deep personal connections with their music and for that reason would want to outright own it.

Now, as much of a Jobs fan as I am, I’m not about to argue that everything he said should be accepted as universal truth forever more. But in this case, I think he might have a point, at least for some people.

Music fans do not buy the most music

Take a look at the biggest selling albums of last year. It’s like a compendium of all that is awful – Emeli Sande, Adele, Ed Sheeran, One Direction. The higher echelons of the charts are consistently dominated by massive pop records that a real music fan would avoid at all costs.

Sorry, bare with me, I am trying to keep my muso fascism to a minimum here.

Of course Ed Sheeran has fans (lots), and what he records could be loosely termed ‘music’, so I suppose they could be called ‘music fans’. But what I mean by music fan is those people who would have bought 10 CDs a month in the 90s, obsessing over new releases and finding the latest bands. They are not Ed Sheeran fans.

And Adele! Your mum probably loves Adele. She probably loves Adele so much she didn’t bother to buy another album all last year.

These artists sell the most records, but the people who buy those records do not buy the most records. In fact, it is a necessity for an album to get to that level of sales to be bought by the people who only buy an album every two or three months.

To these people, $10 or £10 a month is more than they care to spend on music. They’d be paying a monthly fee to listen to the same few tracks. They are the long tail of music purchasing, and there is clearly a hell of a lot of revenue to be made on those people.

Piracy? What piracy?

The other great thing about selling music to the non-music fans (aside from the sheer number of them) is that they are less likely to pirate anything. They are only spending £6.99 on an album every three months, so what would be the point of going through all the effort involved with illegally downloading it?

Also, as you know, your mum may not be a massive music fan, but she loves Adele’s album. She wants to properly own it.

Spotify’s limited plays

I find it amusing that one of the limitations on Spotify Free is that you can only play the same track five times.

I’m a premium user, and if this limitation was imposed on my account, I doubt I would notice. The reason I pay £10 a month is so that I can listen to as much music as possible. If Spotify was a buffet, I would help myself to a bit of everything. If I look at my track scrobbles, not a lot gets played more than three times.

This limitation is aimed squarely at non-music fans. Those that want to listen to Next to Me by Emeli Sande over and over again. It is either genius or stupidity from Spotify, imposing precisely the limitation that will most irritate its free users, on its free users.

Is it too late?

Spotify has grown at a ridiculous rate. It has clearly achieved massive success, otherwise we wouldn’t even be talking about Apple closing down on this market. It’s hit 20 million users, 5 million of those paying monthly fees.

So could it be that Apple’s been too slow on the uptake here?

Well, iTunes had 200 million registered accounts at last count in early 2011. A number that has no doubt grown a lot since then.

So that’s a pretty resounding ‘no, it’s not too late’. If executed right, with its iTunes user numbers, Apple’s streaming service could still crush Spotify.

Room for both?

Whatever Apple’s streaming service looks like, I doubt it will be a total replacement for the traditional iTunes model. Even in Spotify Premium there is still a ‘get’ button next to every track, should you wish to actually own it.

The new iTunes (or iRadio, as it’s rumoured to be dubbed) will presumably be a coexistent service, something to offer the musos who want an ‘all you can eat’ option, whilst still allowing anyone to outright own whatever they want.

If that’s the case, and it likely will be, at the very least Apple will need to keep in mind which services are for whom. After all, if Ping is anything to go by, Apple and iTunes don’t exactly have the greatest track record in launching coexistent band wagon jumping services.

Ian McKee

Ian started out his career working in travel PR, working for tourist boards, airlines and hotel groups. Whilst there he carved out a position as a digital communications expert, managing social media, SEO and email marketing campaigns for clients.