Imagine clicking iTunes’ “Buy” button to purchase the latest record from Drake or Pharrell Williams, only to get a popup from Apple suggesting you’re behind the times.
That’s what might happen as Apple uses its massive consumer base to push streaming music on the masses, even going so far as prompting iTunes users to switch from buying songs to subscribing to a cloud service.
That sort of mid-purchase upsell is just one possible element of Cupertino’s strategy to shake up the music industry again, and the Apple streaming music plan just might be crazy enough to work.
Apple has almost single-handedly turned smartwatches into a “thing,” and it has the tech infrastructure — and the much-needed marketing muscle — to do the same with streaming music.
iTunes is still the biggest store for download sales, but those numbers are slipping steadily as streaming services like Spotify and Pandora gain users. While Apple has lagged in this area — with internet radio service iTunes Radio failing to catch fire since its launch in 2013 — the company’s purchase of upstart Beats Music service last year showed Cupertino isn’t ready to cling to sinking downloads as the streaming ship sales.
Now the industry is waiting impatiently to see what kind of innovation Apple can bring to the table in its quest to turn casual music listeners into streaming subscribers.
Apple streaming music upsell
The move to use iTunes as a sort of lead generator is mentioned in a story by the Wall Street Journal, which quotes the usual “people familiar with Apple’s thinking” as it lays out how Apple plans to revamp Beats Music and fold it into iOS.
“The company — the world’s leading music retailer — is prepared to cannibalize its download business in favor of streaming, which has been gaining traction world-wide,” the Journal reported Monday. “The subscription model offers the prospect of more revenue for both Apple and the biggest music labels. Apple’s push may include prompting people who download a $10 album to instead subscribe to the streaming service for $10 a month.”
As music industry watchers know, iTunes’ time at the front of the pack is fading, and Apple appears ready to whip that horse till it bleeds users.
It’s a delicate balancing act, though: Outside the rarified world of Silicon Valley and the tech media bubble, streaming services still have a long way to go before the average Joe decides to pay $10 a month for an all-you-can-listen subscription. Various services’ changing artist rosters make streaming seem less reliable. It’s also a generational thing, with some older music lovers clinging to their CDs and vinyl, but streaming is undeniably the future — especially if a company like Apple can make it seem like the natural order of the universe.
Apple’s revamped streaming service, which is rumored to lean on human curation at the hands (and ears) of a growing stable of celebrity DJs, is expected to be unveiled at the Worldwide Developers Conference next week in San Francisco. Particulars like whether there will be a free, ad-supported tier remain unanswered, and it’s also possible that Apple will not be able to hammer out deals with all the major record labels in time for a WWDC rollout, the paper reports.
Catching up with Spotify, which said it generated more than $1 billion in revenue in 2014 on the strength of 15 million paid subscribers and an additional 45 million free users, won’t be easy. Likewise, Pandora says it has 79 million active users, although it lost $30 million in 2014 (with $921 million in revenue). By comparison, Beats Music had only about 300,000 paid subscribers, all in the United States, according to the Journal.
Repeating the Apple Watch refrain
Still, if anybody can make streaming music a household commodity, it’s Apple. Take a look at the Apple Watch: By creating an elegant device — and then dumping untold millions into a broad marketing campaign that included slick TV commercials and freebies for high-profile celebs — Cupertino crafted what’s arguably the first mainstream hit wearable.
In its own way, Apple is like the successful record producers of the music industry’s golden era, turning out a steady stream of shiny new products, then marketing the hell out of them and working their industry connections to generate mainstream hits and piles of profits. The latest versions of iOS 8 magically surfaced an Apple Watch app that put a constant reminder of the new wrist gadget right on iPhone users’ home screens. Talk about “synergy.”
The end result is that the public gets a steady stream of stuff to scratch that ever-present itch to consume, and everybody goes home happy.
With Beats Music co-founders Jimmy Iovine and Dr. Dre on board, Apple might even have the industry connections and artistic street cred to put to rest the main complaint that professional musicians harbor about Spotify and similar services: streaming royalties that have proven far less lucrative than download sales.
Apple’s ability to pull it off has never been more clear, as the company has expanded its empire to more and more facets of our lives. With the Mac and iOS ecosystems, as well CarPlay, HealthKit and the forthcoming HomeKit platform for home automation, Apple has methodically set up an interwoven platform that encompasses almost all aspects of daily living. By leveraging its ever-expanding user base to push the revamped Beats Music (or whatever it’s ultimately called), Apple could once again change the way the world consumes music.
Put that in your iPod — or pull it up on you iPhone or Mac — and press play (preferably while listening through your Beats headphones).
