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This Is How Apple Beats Spotify

By applying the App Store model to artists, Apple could build more than just another sleek on-demand streaming music service.

This Is How Apple Beats Spotify
[Photo: Flickr user Flattop341]

Long before Apple bought Beats and its on-demand streaming music service last year, Apple, insiders said, had its sights set on building a music service that could outrun Spotify. That service is reportedly due to arrive on iPhones sometime this summer, but there’s still a lot to guess at. How much of the Beats Music app will it incorporate? Will Cupertino purchase Taylor Swift’s record label before (as the rumor goes) Snapchat snaps it up? What the heck will Apple’s latest big-name hire, DJ Zane Lowe, mean for its next foray into music?

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With an alleged 800 million iTunes accounts and associated sets of credit card credentials, including 200 million active buyers, Apple is an undeniable leader in online music sales. But those sales are now declining, and streaming is booming. Spotify now has 15 million paying customers, and in the process, the company says, artists have earned over $2 billion. That hasn’t stopped artists from lamenting the terms of the arrangement (and, if you’re Swift, abandoning it altogether).

That’s one reason why, regardless of content, Apple would be wise to compete with Spotify not only for the attention of listeners but for that of artists too. (Rhapsody already claims to pay artists three times what Spotify pays.) If Apple wants to take on Spotify, rather than just giving iTunes visual and programmatic upgrades, Apple could do something simple: run iTunes Music the way it runs its successful App Store, and give artists more control.

Dashboard from Musicmetric, a newly acquired company by Apple.

Treat Artists Like App Developers

Artists (or rights holders) should get direct access to upload music like app developers and book publishers currently do. Instead of going through a third-party distribution service—like TuneCore, for independent artists—Apple could bring artists into the fold more, while offering them increasingly valuable analytics around their music.

Last November, Trent Reznor, who came to Apple from Beats, described the premise of his work on a new “delivery” platform to Billboard: “There’s a whole generation of kids that listen to music on YouTube, and they’ll suffer through that ad if there is one. They’re not going to pay a dollar for that song. Why would you? It’s a complex problem.” He noted that streaming music services still haven’t reached their true potential for listeners or artists. “I think the right streaming service could solve everybody’s problems. I just think we haven’t quite hit the right formula yet.”

As paid downloads give way to lower-paid streaming, it’s easy to imagine Apple’s CEO, Tim Cook standing onstage and saying, “Look how much money we’ve paid out to artists.” It’s the same phrase the company uses when speaking to its app developers.

An artist-friendly platform ultimately creates more excitement, and gives Apple more control—something it loves. Giving artists more control in the process could also reinvigorate the way people tend to think about iTunes, which looks increasingly like a dinosaur next to music streaming apps.

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Darius Fong, a Grammy-winning recording engineer who’s also created a music sharing app called weeSPIN, sees the benefit of Apple offering a new 360-degree experience. One that works with hardware and software and includes all of Apple’s media content.

“If Apple combines this with a direct-access content management portal, artists can control how they deliver content to benefit both parties,” explains Fong. “For example, they can allow certain songs to be streamed for free, or easily collaborate with others like app makers, authors, writers, et cetera.”

Start With iTunes Radio

It’s important to note that access to unlimited streaming music is still a foreign concept to the mainstream. CDs and digital downloads are both declining in sales, but Spotify has yet to make up the difference. With 60 million global users—and 15 million paying a monthly subscription—Spotify is gaining momentum, but it hasn’t peaked yet.

In hindsight, iTunes Radio now looks like a piece of Apple’s new music plan that just happened to come first—but it was always meant as a supplement to an on-demand service. In the future, instead of iTunes Radio offering a download button next to each track that plays, it could be a button offering access to all of this artist’s discography instantly.

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And an on-demand iTunes streaming music service, I’d imagine, won’t ever have a free tier, like Spotify does. ITunes Radio is that free tier, up-selling interested users with on-demand streaming.

Every time someone goes to buy an album through the iTunes store, it’ll be a chance to advertise unlimited access to all the music available for the cost of one album each month. Apple won’t, or shouldn’t, stop offering downloads, the new streaming service will just live alongside paid downloads—something Spotify doesn’t have—until streaming cannibalizes downloads completely.

Being More Open

Opening direct access to artists would also likely mean providing artists access to more analytics—a step that Apple has been reluctant to do even for its App Store and developers. But an iTunes streaming service that’s generating both ample revenue and data for artists could threaten Spotify’s dominance. Analytics and the data around music streaming is becoming a kind of payment, one that the artist or manager can use to generate more revenue on tour, for instance. Money from recorded music might be falling, but live music is still an opportunity for middle-class musicians to make a living wage.

“Artists should not only see analytics, they should be able to customize their release campaigns and perform direct to fan marketing,” says Fong, the engineer-turned-developer, who points to Apple’s music “thought leaders,” like Ian Rogers, CEO of Beats Music, as part of that trend.

If iTunes Streaming does open a few doors and provide a more artist-friendly experience, there’s still one concern Apple will need to address: The company will need to remain open to developer access the way music services like Spotify, Rdio, and others have. There’s a new world of music consumption where a public API can help music services stay relevant with an audience stuck inside apps. It’s arguable that allowing the world access to its huge music library helped propel Spotify to being much more culturally relevant than the other music services.

Consider the veteran music service Rhapsody: It’s still growing in paid subscribers—now with 2.5 million—but it remains a joke among developers building trendy music apps, and it’s rarely if ever mentioned as notable in streaming service comparisons; seriously, try and find a reputable site listing it as a favorite. Among music services, it’s the Windows Phone: Good in every right, yet ultimately left lonely and secluded.

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Speaking of which, reports indicate that while Apple’s app will come to Android, it will not initially appear on Windows Phone. Even if a new streaming service from Apple doesn’t fully embrace developer support, it still needs to provide access to things like connected speakers. Sonos, LG, Sony, Denon, Samsung, and others are all embracing the wireless home speaker market, and without Apple’s new service Spotify would be left to reign supreme in growing markets.

Apple opening up its data streams isn’t out of the question: Apple has begun to allow developers access to see a user’s iTunes Match songs (if a user subscribes to that $25/year service) that aren’t on the current device. Meanwhile, Beats Music embraced Sonos right from the beginning, and could help Apple open up a little on that front.

Even if Apple does get exclusive content deals or open its platform to encourage a direct artist relationship, that doesn’t mean Apple would want to become a record label–nor should record labels be threatened. Jump-starting a streaming service with some high-profile names like Taylor Swift might earn Apple cool points, but that’s all it would do.

The better way to get a sense of Apple’s continuing music strategy might be to look at how it’s handled apps. Apple didn’t become an app development studio or create one, it simply built the few apps that made sense for its devices and left the rest to third-party developers. It wants as many people as possible building iOS apps and creating the best mobile apps. That’s a surefire way to keep people buying your hardware, and to keep transforming industries. And if Apple and its growing pool of musical talent want to, it could do for music what it’s done for apps, and transform yet another one.

About the author

Tyler Hayes is a Southern California native, early technology adopter, and music enthusiast.

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