Apple Music’s recipe for a streaming hit? Cash, cards and marketing muscle

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Sony Music CEO Doug Morris says Apple Music is
Sony Music CEO Doug Morris says Apple Music is "happening tomorrow."
Photo: Midem

When Apple unveils its revamped music service Monday, it will mark a “tipping point” for mass acceptance of streaming over downloads, predicts Sony Music CEO Doug Morris.

The new streaming service, which Morris says will be unveiled tomorrow at Apple’s annual Worldwide Developers Conference, will challenge on-demand streaming services like Spotify and Rdio thanks to a very particular set of skills Cupertino has acquired over the years.

“What does Apple bring to this?” Morris said Sunday at the Midem music converence in Cannes, France. “Well, they’ve got $178 billion dollars in the bank. And they have 800 million credit cards in iTunes. Spotify has never really advertised because it’s never been profitable. My guess is that Apple will promote this like crazy and I think that will have a halo effect on the streaming business.”

Morris’ comments, as reported by VentureBeat, confirm that tomorrow we’ll get our first glimpse of Apple’s master plan for a music service. The WWDC revelation will follow months of speculation about what Cupertino would do with iTunes Radio and Beats Music, which it purchased for $3 billion in 2014.

Apple has been widely expected to take the wraps off its next-gen music service at WWDC 2015, but negotiations with record labels that control rights to the music that will fuel the service have reportedly come down to the wire.

The Beats successor is expected to cost $10 per month, like Spotify, and feature exclusive albums by major artists along with celebrity DJs who will curate playlists. The service is said to lack a free tier, which record execs like Morris don’t favor, although Apple will reportedly offer a free trial period to woo new users.

The problem with Spotify: market penetration

While the tech press has been talking up Spotify for years, the service still doesn’t resonate with mainstream consumers raised on downloads, CDs and vinyl. While YouTube has become the de facto free jukebox for a generation, Spotify has amassed only 15 million paying subscribers since its 2008 launch. The company claims more than 60 million “active users,” which includes 45 million people who use Spotify’s free, ad-supported tier.

That’s not to say Spotify isn’t great — I’m a paying subscriber and I love it. I got hooked on the service thanks to a free trial of Spotify’s mobile app, which lets you play any track from the service’s massive catalog on demand from your smartphone. That killer feature isn’t available with Spotify’s free tier and, like an iPhone, it’s something you almost can’t imagine living without once you’ve given it a try.

Morris thinks on-demand streaming is the future for the music biz, and he gave kudos to Spotify founder Daniel Ek for his pioneering service. Morris called Sweden, where Spotify launched in 2008, the “first mature streaming country.”

Daniel Ek has done an incredible job with Spotify because pushing that boulder up the hill — where he’s gotten it is an incredible, incredible accomplishment in my mind,” Morris said.

However, as Morris points out, Spotify doesn’t have the money to hammer streaming music into mainstream consumer consciousness.

Apple, on the other hand, does. And it might even be willing to cannibalize its shrinking iTunes business to once again transform the way the public pays for music.

Just as Apple used its marketing muscle to turn the smartwatch into a mainstream consumer product, the company could use its advertising savvy and massive money chest to make streaming music a thing on main street.

Not everybody is convinced Apple can crack the streaming game. Must-read music industry analyst Bob Lefsetz predicts Apple has “nothing new to offer that’s gonna make any difference.”

Advertising and promotion don’t win online,” Lefsetz wrote recently. “It’s all word of mouth for excellent products. Instagram and Snapchat were not sold by hype. Why does everybody believe that a big press story will put Apple streaming over the top? It won’t.”

Still, Sony’s Morris sounds optimistic. And if Apple’s advertising machine can make paid, on-demand streaming music as American as apple pie, baseball and Chevrolet, it could be just the boost the record industry needs.

“A rising tide will lift all boats,” Morris predicted, perhaps taking a jab at Jay Z’s streaming washout, Tidal. “It’s the beginning of an amazing moment for our industry.”

Couple a sustained Cupertino advertising blitz with innovation from Trent Reznor (who’s reportedly retooling Apple’s Spotify killer from the ground up) and novel integration into Apple’s ever-expanding ecosystem, and you just might have a recipe for streaming success.

You can watch Morris’ Midem keynote conversation with Rupert Younger, director of the Oxford University Centre for Corporate Reputation, below. The discussion of streaming music and Apple’s new service begins around the 37-minute mark.

Let’s call it … Apple Music?

Meanwhile, Morris isn’t the only person letting Apple secrets slip. In yet another apparent indication of Apple’s relaxing stance with regard to iron-fisted secrecy, Apple’s chief of French content shared a photo on Instagram that appears to confirm the name of Apple’s streaming music service.

If the photo can be believed, the long-awaited streaming service will be called … drum roll please … Apple Music.