At one point during its developer conference today, Apple rolled a video clip that sincerely compared the advent of smartphone apps to the invention of the microscope and the industrial revolution. Sadly for those bored reporters stuck watching the event, the company never quite managed to match that moment of unbridled, self-aggrandizing hyperbole. However, I would argue that it came close later on while unveiling its long-gestating streaming music platform, Apple Music. “It will change the way you experience music forever,” CEO Tim Cook told the audience as he stood on stage. Soon, a company executive was walking the onlookers through an app that, for the most part, seems like a slightly souped-up version of every streaming service you’ve seen before.
Which may, in the end, be good enough for the product to succeed. As Peter Kafka writes at Re/Code, all good streaming apps are basically alike, selling more or less the same music with similar interfaces. That’s because it’s pretty obvious what works in the business and what doesn’t. The big differences between Apple Music and streaming leader Spotify—the ones that will decide which wins and which loses in what’s beginning to look like a winner-take-all market—basically come down to promotional power and price. Both sell paid subscription services for $9.99. But Spotify offers a free, ad-supported tier, while Apple does not. Instead, it will give customers a complimentary three-month trial, before starting to charge. This naturally gives Spotify an advantage, just like it has had all along in the streaming wars. But Apple does have a couple of strengths to play on.
First, it has a giant marketing budget, and, as Kafka points out, “800 million credit cards on file.” That should make signing up for the service relatively frictionless for Apple fans, at which point the company can hope customers either forget to cancel their subscriptions once the trial runs out, or that enough people who have never tried on-demand streaming—and most of world still hasn’t—fall in love to make the app a hit.
Second, as Annie Lowrey notes at New York, Apple has the ability to burn lots of money, whereas Spotify, for all its ubiquity, has failed to turn to turn a profit, and nobody knows whether it ever will. Apple, like Google, could theoretically run a subscription streaming service as a loss-leader or at break-even, just for the sake of maintaining cultural relevance, and keeping music fans using its ecosystem of products. Spotify, unless a larger company buys it, doesn’t have that luxury. So Apple could potentially win just by hanging around long enough.
There’s another running theory that, if true, would give Apple an advantage, or at least negate Spotify’s strengths. Some major-label executives have clearly come to view free streaming as a mistake, because they feel it has cannibalized downloads. It’s possible they will eventually try to negotiate away Spotify’s right to a free tier, leaving it with more or less the same service as Apple Music. I find this a bit unlikely, at least in the near future, because some industry insiders still seem to think free streaming is a necessary evil required to fend off piracy, and because the labels, thanks to their equity stake in Spotify, have an investment in its long-term success.
Finally, Apple has Taylor Swift’s catalog. The pop star is only willing to license her discography to paid services, which, as we all know, rules out Spotify. And while most major artists aren’t in her position to pick and choose, because the record labels control their catalogs, there are at least a few others who could take similar stands, and help Apple siphon off customers who might otherwise pay for Spotify.
And that’s about it. Apple Music does have a few bells and whistles. It will offer playlists curated by humans with actual eardrums, rather than algorithms, as well as a 24-hour worldwide radio station featuring real, on-air DJs. Drake is sort of involved in part of the project. And it’s currently offering a very cheap $14.99 family plan for up to six people, though Spotify reportedly has something similar in the works. In the end, all those bits are a sideshow. The main point of Apple Music is that it exists, and may still exist if the competition fails.