Let’s Talk About Apple Music and What It All Means, Shall We? [EVEN MORE UPDATES!]

[NOTE: Because there’s so much interest in Apple’s new music service, I’ve adding/amending as we go. This might be the last update–or not. We’ll see. – AC]

As Eddie Cue’s Apple Music presentation dragged on and on and on, I kept thinking “This is it? This is the best Apple could do? It’s…embarrassing.” But now that I’ve had a chance to think about it, maybe there’s some long-term genius at work. Let’s talk a look at the three pillars that make up Apple Music one at a time.

 

1. Apple Music

Apple’s entry into the streaming music world is a re-skinned Beats which works much like any of the existing services complete with support for saving playlists for offline listening. And those who have tried it say it works just fine. (UPDATE 1:  Or does it?) (UPDATE 2: Here’s another take.)

PRO: Apple has 800 million credit cards on file through iTunes. All it takes is one click for all those people to sign up. That’s about as frictionless as it gets. And once someone signs up, how likely are they to cancel?

CON: Unlike Spotify, Rdio and most of the other services, there’s no permanent free tier.

PRO:  Studies have shown that the vast majority of people using those services convert from free to paid in about 70 days.

CON: No Android version. Yet.

PRO: Apple’s entry into this arena will force all the other players to up their game. They may say they’re not worried, but you can bet that they’re carefully assessing the situation. UPDATE: BBC Radio 1–Zane Lowe’s old employer–isn’t worried, either. Or so they say. Others say they ought to be. Comparisons are being made to newspapers.

CON: Apple Music isn’t compelling enough to get longtime Spotify and Rdio users away from their platforms, especially after they’ve spent years creating playlists and building followings. Why cancel and start all over again?

PRO: Spotify is the biggest streaming service out there with 20 million paid subscribers globally (along with 55 free users) and $526 million in fresh investments. If Apple manages to sign up just 2% 3% of their existing customers for Apple Music, they’ll have more subscribers than Spotify.

CON: I have doubts about how well Siri will work.

PRO: Along with algorithmic suggestions, Apple Music will apparently have human curators. This is a direct shot at Pandora.

CON: Apple Music will stream at 256 kpbs, which seems a little chintzy. Why not take it up to a proper 320 kpbs like some competitors?

VERDICT: Those expecting Apple Music to change the streaming music service landscape overnight are going “meh.” But over the long run, Apple could prove to be a major player in this space thanks to their credit card database and the tens and tens and tens of millions of iOS devices out there.

 

2. Apple Music Connect

The press release states “artists can share lyrics, backstage photos, videos or even release their latest song directly to fans directly from their iPhone. Fans can comment on or like anything an artist has posted, and share it via Messages, Facebook, Twitter and email. And when you comment, the artist can respond directly to you.”

PRO: If I’m Jay Z, I’ve already been on the phone with my accountant asking “How much of a tax write-off can I get if I close down Tidal now?”

CON: We don’t know yet if any of this will be behind an additional paywall. (Update: Free users will get to use Connect but with limitations.)

PRO: Social networking applied to music. Nice.

CON: Anyone remember how well Apple did with Ping?

VERDICT: We’ll see.

 

3.  Apple Music Radio

This one had me sneering. “Oooo. A 24/7 streaming station! A global music station! With DJs! Isn’t this something that every single terrestrial station is doing right now? Aren’t there, like, 40,000 global stations on an app like TuneIn Radio? BIG F**KING DEAL!”

Then I started thinking more about what this could mean. UPDATE: Other people are reconsidering, too.

PRO: If this is truly a global radio station, then Apple has worked out some rather complex licensing deals to allow music to be streamed into all 100 countries in which Apple Music will be launched. Many terrestrial stations are geo-blocked from crossing international borders. For example, thanks to some goofy licensing rules, The Edge/Toronto can’t be heard by anyone with a US IP address. Meanwhile KROQ/LA can’t be streamed into Canada.

CON: Beats 1 looks like it’s modeled after the BBC. No one outside the UK cares about BBC-style programming.

PRO:  Knowing how the music industry works–and remember that old-school record industry guy Jimmy Iovine is deeply ingrained in all this–getting a song played on Beats 1 could be extremely desirable and lucrative to any artist who makes its playlist.

CON: This could lead to old-fashioned thinking about music promotion.

PRO: Live DJs talking about music in real time? Providing context to the songs that are played? And Apple actually using the word “radio” to describe what they’re doing? I love it! But then you’d expect that from me.

CON: It’s still the old radio model. In an age when people want on-demand music from their mobile devices, are they going to rediscover (or discover for the first time) the benefits of having a real person talk about music in real time? Damn, I hope so…

PRO:  Only Apple could afford to run something as expensive as Beats 1.

CON: Beats 1 comes from only three cities: LA, New York and London. The format and music choices will be limited.

PRO: The name “Beats 1” implies that there’s going to be a Beats 2, Beats 3, Beats 4 and so on, all with different formats and perhaps from different cities with different personalities. Remember that Zane Lowe came from BBC Radio, which has Radio 1, Radio 2, Radio 3, Radio 4, Five Live, 6 Music and so on.

UPDATE: Iovine had this to say to Billboard:

Explain the thinking behind having a radio station…

Iovine: What’s gone on in the last 15 years in radio is that it’s really become manufactured. It’s either genre-based or beat-driven or research-driven. So I said, let’s build something that’s got none of that that just plays music because it’s great. So we got Zane, someone who’s very progressive about young, upcoming artists who want to push it by establishing great records. But don’t play it just because it’s a [particular] artist. Like The War on Drugs — they should be gigantic. I think they’re fantastic. This is the kind of place where a band like that can really thrive.

Okay, so does this mean that nothing will be segmented by format? Interesting…

CON: A really cool thing would be a feature where any Apple Music user could set up their own Beats station. Democratize the whole thing, you know?  Still might happen, though…

PRO: Whoa. All this integration just made CarPlay a whole lot more interesting–and perhaps more of a threat to in-car listening of terrestrial radio.

CON: We’re still a ways off from seeing CarPlay rolled out on a massive scale.

PRO: Using the familiar radio model has a good chance of engaging Apple’s existing users quickly. It will end up service as Apple Radio’s “barker channel.” (Radio consultant Mark Ramsey explains what that means here.)

VERDICT: Do NOT write off Apple as a radio player, old-time radio industry. This could turn into something huge.

 

ASSORTED NOTES AND COMMENTS:

No royalties? WTF?: A leaked contract reveals that during the three month free trial, Apple won’t pay out royalties to any artists. Do not freak out about this! It’s not that Apple is being mean to poor artists. Instead, this was a carefully negotiated point with labels and rightsholders.  Like any other music service, Apple cannot just arbitrarily decide not to pay.

Here’s what I think: In exchange for allowing Apple to skirt royalties for this short period of time, Apple won’t ever offer a freemium service like Rdio, Spotify and all the others.  “You get a taste for three months. After that, you pay.”  If you’re of a certain age, this might sound familiar. Anyone remember the 12-albums-for-a-penny deal from the Columbia Record Club? This is exactly the same thing. Artists didn’t get royalties for any albums they sold through the CRC, either.

The record labels hate the freemium tiers. Is this a workaround towards phasing out free? Don’t bet against that. However, the labels would like to point out that there is no collusion to eliminate free.

What should terrestrial radio do?  Fight back. Steal some of these ideas from Apple.

Wait: Taylor Swift is on Apple Music?  Apparently. Take that, Spotify. (Paywall)

Speaking of artists who won’t stream, you can get them to stream on Apple Music: Taylor Swift, the Beatles and a bunch of other big acts will won’t allow services like Spotify to stream there music. But with Apple Music, you can make that happen. Apple Music can tell if you’ve (a) purchase music from one of these artists from iTunes; or (b) ripped it from a CD that you presumably bought. It will then go through the iTunes store and if those songs are available, they will be added to your Apple Music stream.

This isn’t about stealing users from other streaming service: Nope. It’s about adding new users to the world of streaming. And Apple is fishing in a huge pond filled with existing and future Apple users.

Think about this: If you’ve been using Rdio, Spotify or whatever, you’ve probably invested a considerable amount of time creating playlists and following people. It would take a lot for you to abandon all that work and move to another platform. But if you’re just getting into streaming, you have no such investment. Apple wants people who have no such commitments. And there are billions of them.

Don’t underestimate the appeal of purchasing music through iTunes: For all the other streaming services, your music library will disappear the moment you stop subscribing. Apple Music allows you to buy (i.e. own forever) the music that you really, really, really can’t do without ever. This hedges against your streaming service going out of business or being acquired by a company you don’t want to do business with.  Streaming is for auditioning. Purchasing is forever.

 

CONCLUSIONS

Apple is making a play to be bigger in music than it’s ever been and everyone’s a target.  By integrating all these features–streaming, social, real-time broadcasts, music purchases–Apple is showing that they want to deliver the best possible music experience to as many people who own Apple products as they can. And there are a lot of them. Apple Music will come preinstalled on all Apple iPhones, iPads and maybe computers. And when anyone updates to the next version of the operating system, that Apple Music icon will be there.

UPDATE: Are there any kind of antitrust pitfalls here? The Financial Times says so. (Paywall) So does the New York Times.

Remember: we can’t assume that everyone knows what they’ll want in the future because they’re basing those wants on what we have today.

Apple Music could make the company more powerful than ever. Not today. Not tomorrow. Not next week. But in the long run? Watch out.

[Note: I’ll continue to amend/update this post as I continue to think about things. This is an evolving story.]

Additional reading:

Apple Music: 13 Facts You Need to Know.

Apple Music gets a debut at last, but with few surprises

Apple Music unites streaming, radio and social for $10 a month

Apple Music: A Platform Play With Hidden Nuance

What I Want To See Next From Apple

Apple Music Ingests Beats DNA in Brand Challenge to Streaming Rivals

BMO is bullish on Apple

The four kinds of royalties artists can earn from Apple Music.

The Drake vs. Jay Z feud has gone digital.

Good Question: What Does Apple Music Mean for iTunes Match?

Apple Music and Apple’s Focus

The truth about how artists get paid for streaming.