Can Apple save the music industry again?
More than a decade ago, the music industry was in crisis. Songs were being passed around the Internet illegally, and CD sales were in decline. So major labels and musicians embraced Apple, which convinced consumers to open their wallets again with iTunes. Now again in turmoil, the music industry is looking once more to Apple, which launches its new $10-a-month streaming service June 30. The challenge this time: Find a solution for the industry as it struggles with free streaming sites threatening the core economics of its business.
With its paid service, Apple will go against the grain of the tech industry, which is seeing the quick growth of free models for music. Google, which has 1 billion music listeners through YouTube, introduced its own free streaming service the week of June 22. Pandora, the early streaming specialist, has 85 million listeners, and Spotify has doubled the number of its nonpaying users to 75 million in the in 2015. In months of negotiations with music labels and artists big and small, Apple committed a vast marketing budget for glitzy TV ads and direct marketing to the hundreds of millions of e-mail accounts it holds. Apparently, it promised slightly better royalties than Spotify and other streaming partners and perks for consumers that aren’t available on other streaming services. But most important, Apple promised to strictly enforce its policy that users must pay after a free, three-month trial. In this way, Apple will differ from Spotify and Pandora, which charge for premium tiers of service but allow users to stay on their free ad-supported programs. The free tiers don’t offer the same perks as the paid tiers, but for the vast majority of its users those benefits haven’t mattered enough to get them to upgrade for a monthly fee.
Can Apple save the music industry again?