Big Tech, Streaming Wars & HiFi Audio
Apple Music finally announced the launch of their High Fidelity audio version for all subscribers at no extra cost- but not everyone is happy
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What’s good, people?
Apple Music finally released its version of High-Fidelity and lossless audio, something we wrote about in a previous edition of our newsletter, with support for Dolby Atmos- the most popular surround sound format in the world, to its 80 million-odd subscribers.
Apple claims Dolby Atmos to be a “revolutionary, immersive audio experience that enables artists to mix music so the sound comes from all around and from above”, with Oliver Schuster, VP of Apple Music and Beats, claiming that “ Listening to a song in Dolby Atmos is like magic”.
The best part? It’s absolutely free of cost.
Apple announced that the standard $9.99/ month pricing for subscribers will include the new audio version, putting an end to long-drawn speculation around potential price hikes in subscription plans, something Spotify announced earlier this month.
Moments after Apple’s announcement, Amazon dropped news stating “ Amazon Music HD For All, Now at No Extra Cost, “- confirming that a range of HD audio options on Amazon’s Music Unlimited service will now also be available for just $9.99 per month.
But why is that surprising?
That’s $5 per month less than Amazon was previously charging for its HD tier, which includes HD audio, Ultra HD, and 3D Audio options. Seeing Apple announce no hike for its premium version, Amazon was quick to drop its own subscription prices as well.
But while Apple and Amazon bicker amongst each other, why is dropping prices such a bad thing?
It’s hurting the very people it was meant to help- artists and music rights holders. Warner Music Group’s pre-IPO filing last year included a key part of the modern music industry’s big pitch to investors:
“In 2019, Amazon launched Amazon Music HD, a high-quality audio streaming offering that is available to customers at a premium price in the United States. We believe the value proposition that streaming provides to consumers supports premium product initiatives.”
The Music industry was bullish on streaming platforms such as Apple and Amazon raising prices for their premium offerings and in turn, compensating them fairly; however, this is a step backward into ensuring an equitable revenue share between streaming platforms and artists. Check out our previous edition on Streaming Wars to get more context on how exactly the money flows in the music industry.
So how do lesser subscription prices make sense for streaming platforms?
For global tech giants, it’s a lot easier to make money with HD hardware than it is with HD audio subscriptions.
The universality of HD audio at a standard streaming price point makes a lot of sense for Amazon and Apple, and it gives price-conscious customers a crucial perk to drive their desire for a hardware upgrade.
Apple launched its HD-ready Airpods Pro at a $249 price-point in October 2019, while Amazon’s Echo Studio speaker arrived a month later for $200. Apple’s latest Airpods 3, to be announced any day now, are once again expected to around a three-figure mark.
So while Big Tech companies may value music, it is not half as much as they value its ability to sell higher-margin products (like Amazon Echo speakers or high-end Airpods).
Jimmy Iovine- the co-founder of Beats with Dr. Dre, earlier predicted that when “all streaming services are the same” what will naturally follow is downward pressure to become the platform offering the lowest price to consumers.
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Our take on this?
We are seeing the dynamics of the music industry shift in a manner wherein the act of consumption of music has become a utility, and not a luxury, and songs themselves have started being treated as individual business units.
In such a scenario, a high-price premium HD tier is the last thing streaming platforms would want, as it creates a Good-Better-Best pricing ladder, which takes a more sophisticated view of consumers, rather than assuming they’ll always take the cheapest option.
Most importantly, it also sets a marker for what music, when it’s experienced at its best, is really worth.
Over the next decade, we can expect a slow war of attrition to rage between music rightsholders and the world’s largest tech giants over precisely this value calculation.
We at Incentify are building to enable artists to get a fair platform to publish and monetize their music, and are excited to bring you more updates on the same. Leave a comment, if you’re curious to learn more, and we’ll arrange for an exclusive sneak peek into our progress so far! If you liked this newsletter from P.S- Follow us on Twitter now! Incentify, why not share it with someone you like? Let’s build the community :)
Originally published at https://incentify.substack.com.
