Apple Music will launch on June 30. Until then, here is a snapshot of the current music streaming offerings via The Huffington Post:
There has been discussion about the percentage Apple will be paying rights holders. ReCode authoritatively reported Apple will pay over 70% of revenue. Peter Kafka goes on to succinctly summarize Apple’s offering:
Apple’s pitch to the music industry, essentially, is that its seven-tenths of a dollar will be worth much more than Spotify’s seven-tenths of a dollar in the long run, because its free service isn’t meant to compete with its paid service, and because it will sign up many more subscribers than Spotify, which says it has 20 million paying users.
Apple Music was announced today at Apple’s WWDC. Beats Music will be phased out eventually but not immediately. “One place, one complete thought around music” is the concept. iTunes radio will become a global radio station broadcasting 24/7 with three high profile DJ’s in New York, London and Los Angels called Beats 1. Apple Music will also be conventional on-demand streaming – listen to anything anytime using offline mode. And Apple Music “Connect” feature will give an artist the ability to connect directly with fans via video/photos/etc. all from Apple Music.
So, Apple Music is:
— Recommendation Engine (For You)
— On demand streaming music service (New)
— Global radio station Beats 1 (like BBC 1…)
— Connect for artists (social network)
— Your iTunes music purchases (My Music)
Apple Music will launch on June 30 for $9.99/month or family plan for $14.99/month for up to 6 people. First 3 months will be free – a decent amount of time to discover, explore and get hooked on the features.
Jimmy Iovine was on stage giving some background on Apple Music while Eddy Cue came in to give details and a demo. No sign of Ian Rogers who was reportedly directing iTunes Radio and Beats Music, now all integrated to be Apple Music.
As always, Apple shows the world their products in grand style stating “Apple Music, the next chapter in music.” The design will most likely be very clean and direct. But I’m not sure I see much innovation here…. yet. They are creating a complete platform to be used on all their devices. Since free radio will catch on faster, much of the focus will be on expanding Beats 1 global radio. Subscribers to follow.
After the June 30 launch, Beats Music subscribers will be asked to sign up for Apple Music. Their library of music and playlists will transfer with them. Details on Apple Music website.
Today’s streaming music stats as reported by The Wall Street Journal. The question many are asking is, will the upcoming Apple streaming service affect the streaming eco-system significantly?
Spotify accounts for 86% of the on-demand music-streaming market according to data shared with music publishers.
Meanwhile, Apple has about 85% of the download market. But downloading is in decline.
At the very least, Apple may bring significant attention to the idea of streaming music as most people still don’t know about it. But will their product be innovative, a differentiator that will gain market share from Spotify?
“Beats Music has around 303,000 paying subscribers as of December 2014, all of them in the U.S., according to data provided to music publishers.” Since it appears Beats Music has stopped innovating, it is unlikely subscribers have increased significantly.
“Spotify reported more than $1 billion in revenue last year and said it ended the year with 15 million paying subscribers, plus around 45 million free users.”
On the streaming radio side, Pandora said it had more than 79 million active users in March; it posted a loss of $30 million on about $921 million in revenue last year.
The WSJ goes on to note that “the new Apple radio push is aimed mainly at users outside the U.S., who don’t have access to Pandora and could eventually be converted to paying subscribers.”
The last word needs to go to Steve Albini – musician, record producer and outspoken critic of the music industry. Spotify was founded on the notion that if music consumers have a reasonable alternative to piracy, they will use it. Albini lays out his belief that copyright and piracy have played themselves out. Albini thinks:
that the idea of intellectual property will naturally have to be modified to accommodate the way that people naturally exchange ideas and music and information. That old copyright model of the person who wrote something down owns it and anyone else who wants to use it or see it has to pay him, I think that model has expired. And people who are trying to defend that model are like people on horseback trying to fight against the automobile…I think the term piracy is absurd. Actually, piracy is people boarding a ship with violence and killing people and physically stealing material goods that are then no longer available to people who used to own them. I think equating somebody downloading something on his iPhone with that is preposterous.
For the last 6 months, many rumors have surfaced about how Apple plans to step into the streaming music arena. Speculation of how Beats Music will be incorporated has been rampant across the web and print media. Ashleigh Allsopp has compiled many of these rumors on Macworld UK.
Name change to Apple Music, lowering the subscription price, announcing a release in June at WWDC 2015, free trial period for 1 to 3 months, licensing deals between Apple and music labels not being in place, ability for artists to cross promote other artists, Android version release, suggestion by Apple to music labels to pull out of the free tier in other streaming services, Apple offering to pay the YouTube licensing fees to Universal Music so their songs will not be on YouTube — these are some of the many rumors that have circulated this year.
One fact to note — Warner Music Group announced that streaming music revenue surpassed revenue from selling downloads for the first time last quarter.
Stay tuned for which rumors are true once Apple announces their streaming music product.
The Department Of Justice is rumored to be looking into Apple’s business practices concerning streaming music. Why would the DOJ be investigating? According to The Verge, Apple has been pushing the music labels to remove the free tier from streaming services. As Spotify negotiates to renew their licenses with music labels, Apple is lobbying music labels to not include a license for a free music tier anymore.
If successful, this would greatly reduce the competition when Apple releases the new Beats Music. To date, Spotify is the most successful streaming service with 60 million users. 15 million pay for a subscription so 45 million use Spotify’s free (ad-supported) service. If Spotify is forced to delete their free version, it will unleash a lot of early-adaptor-music-fans that Apple may woo over to their new Beats Music.
Any other reason why the DOJ would be looking into Apple’s streaming agenda? Reportedly Apple “offered to pay YouTube’s music licensing fee to Universal Music Group if the label stopped allowing its songs on YouTube.” Now let’s state the obvious, YouTube is the number one music listening channel in the world, by far. If the worlds largest music label, Universal, were to take their songs off of YouTube, Apple will have artificially constructed a demand for their new Beats Music… maybe. Let’s see if paying loads of money up front is a successful strategy for Apple this time around.
European regulators are investigating Apple for its plan to bundle music streaming with its existing iTunes platform. The speculation is that Apple will release their music streaming service, which is based on Beats Music, in June. Assuming subscription only, with no ad-supported tier, European regulators are “said to be concerned that the company will use its size, relationships and influence to persuade labels to abandon free, ad-supported services such as Spotify, which depend on licenses with music companies for their catalogues.”
Spotify argues that its free ad-supported tier is critical to turn users into paying subscribers. 25 percent become subscribers currently, much higher turnover than other streaming services. Remember that Spotify’s ad-supported tier pays out less when a free user listens to music vs. a paying subscriber. Beats Music (and now Tidal) do not offer a free tier and are looking to catch-up to Spotify’s 15 million users. Now that Apple is involved, regulators are scrutinizing what the new licensing landscape might be.
Increasingly, the chatter from the music labels is for less support of free ad-supported streaming. We know the story well, artists are unhappy by the payouts from Spotify, yet it is their music label that pays them according to their contracts. The Financial Times points out:
streaming may be losing money and artists struggling to get by, but the labels have weathered the digital storm remarkably well. For instance, Universal made operating margins of 11 per cent in 2013 — nearly twice what they were a decade before.
At a time when sales remain stagnant, the profitability of intermediaries such as Universal gets ever harder to explain.
The most transparent service will be the one that pulls ahead.
David Harrell is a musician in the indie rock band the Layaways which has self-released four albums. He reports that Beats Music payed out an average of 1.801 cents per stream from his December 2014 CD Baby account. His graph below shows the difference between the current Beats Music payout and average Spotify payouts (0.428 cents) for the last few years.
It is not surprising Beats Music is a higher rate. Spotify averages two tiers of users — paying subscribers (high rate) and free users (low rate paid by advertising). Spotify’s average payouts will naturally be lower than Beats Music which has no free version to factor in. All payments from Beats are based on paying subscribers (a high rate).
The real question is volume.. does Spotify make up the smaller revenue per stream with a higher amount of listens? People guess Beats Music has a few 100,000 subscribers at best while Spotify has 15 million premium subscribers… In this case, more people for less money is much better.
Apple will be launching their iTunes music streaming service in June at the Worldwide Developers Conference (WWDC). According to music industry sources, the Beats Music branding will disappear and the service will be “based on technology acquired from Beats Music, including curated playlists, cloud-based libraries…” The current price point is $7.99 which is $2 less than the current Beats Music subscription.
iOS and Android will be supported on the mobile side while the service will be integrated into iTunes for Mac users. There has been no mention of web browser support.
Apple has not officially commented on the new music service, so details may change between now and June. It looks like a farewell to Beats Music is imminent…
— Led Zeppelin (@ledzeppelin) February 24, 2015
… and Beats Music. For those who care, Led Zeppelin now has most of their albums streaming on Beats Music. About a year ago, Spotify announced they were streaming the Led Zeppelin catalog. Spotify had an exclusive… up until now.
With the release of the remastered 40th year anniversary version of Physical Graffiti, Led Zeppelin opted to allow most streaming services to carry their catalog also… it’s about time!
Jimmy Page has personally remastered Physical Graffiti and is offering many different version for purchase here.
Listen to Led Zeppelin on Beats Music here.