A few years ago, there was a theory abroad that Apple Inc only started to become the global juggernaut it is today when it got involved with music – something that people truly love.
Certainly, it was the introduction of the iPod that moved the Apple beyond status as a cult computer for graphic designers.
Then, after settling a claim with The Beatles’ Apple recordings, Apple went hell for leather for the music market. Cool music meets cool tech., at the time it seemed a match made in branding heaven.
But now the marriage appears to be going sour.
Last week, it was reported that Apple had been pressurizing music labels to kill off the free streaming service on Spotify.
Apple were also allegedly proposing to pay YouTube’s music licensing fee to the Universal Music Group if they removed their songs from Google-owned Youtube too.
Right now, the US Department of Justice, Federal Trade Commission and even the EU’s Competition Commission are looking into the accusations.
So what has Apple got against streaming free music?
Apple wants to clear the way for the relaunch of Beats Music this summer. (As you will recall, they acquired the headphone manufacturer last May for $3billion.)
If Apple can eliminate ad-supported free services such as Spotify, it can reduce competition to its own service Beats Music.
Yes, that is a bit sad.
Once Apple’s iTunes download store was a dominant power in digital music. But sales of iTunes declined 13% last year, thanks to streaming services such as Spotify.
Timing is an issue here. Spotify’s catalogue licences are about to expire this summer. If Apple can apply pressure on the music industry perhaps they won’t renew their contracts….
But Spotify is still growing.
Available in 58 countries it has 15million paid subscribers (that’s about 25% of its total users). In 201, it became profitable in the UK (and only the UK so far).
Truth is, even if Apple succeed in driving a wedge between Spotify and the labels, there are more services lining up to give out music for free (with advertising) including Youtube, SoundCloud, Pandora and a host of pirate sites.
Meanwhile, people are spending more than ever on ticket sales. North American concert ticket sales revenues hit $6.2billion in 2014.
But the battle for music sales is sinking into an unedifying slugfest over a market whose cash value appears to be diminishing.
If Apple wants to regain dominance in the music business it will have to come up with better ideas than this.
Never thought you’d read that sentence eh?
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