One More Thing: The Streaming War is On

In 2003, the music industry was facing eroding revenues due to the rise of Napster and torrent downloads. In 2015, digital download sales are falling and streaming is the way music lovers are getting their fix.

Last Monday, Apple launched its new streaming service Apple Music. It will debut by the end of June, offering 24/7 access to a radio station (run by actual people, not software), offline streaming and expert music recommendations. Beyond music, Apple’s new venture will also serve as a social network for artists to connect with their fans and share exclusive content, all in one place.

Apple’s strategy over the years has often relied on finding an industry that is under-performing and then creating a product or service that completely turns the market around. But with so many players in the music streaming space, where does Apple fit in?

Streaming: Then & Now

Music streaming has been around since the mid 2000s with companies like Pandora, Rdio, Spotify, iHeart Radio among others. It’s not until relatively recently that the tech giants jumped in the game.

Google offers music streaming through their Google Play platform. Tidal, a streaming service owned by Jay Z and Beyoncé, launched a couple of weeks ago with a much hyped, star-studded event. Beats, the company behind the very successful line of audio gear, launched a streaming service last year and it immediately got bought by Apple, and is now the foundation of Apple Music.

All of these services offer pretty much the same thing: millions of songs, anytime and anywhere, for $10 a month.

But what makes Apple Music different?

Apple owns the most popular mobile operative system in the world and it gives the company a massive pre-install base.

Apple is Switching up the Beat

With millions of listeners, Spotify and Pandora have a good head start over Apple. However, things hit a sour note when you start looking at profits. Artists like Taylor Swift have spoken against Spotify, accusing the company of not compensating artists fairly.

Currently, service platforms offer two different service tiers, one freemium ad-supported service and an ad-free paid subscription. Sure, Spotify and Pandora have millions of active users, but only a small portion are paying customers. The biggest problem with this business model is that compared to paid digital downloads and record sales, it doesn’t generate enough revenue for the business or the artists.

This is where Apple Music has a real chance to shine. Apple’s service does not offer a freemium tier and it offers artists complete control of their music distribution. This is a big step towards ensuring artists get paid what they deserve.

The Times They Are A-Changin’

At this point it’s hard to predict whether Apple Music will be a complete flop or a rocking success. But one thing is certain — once the service goes live, the whole music streaming landscape will change.

What is the magic formula that is going to win hearts and dollars? Exclusive content, radio run by music lovers, for music lovers and a library that satisfies even the most obscure tastes. Or do people just want their tunes for free?

Whatever the winning business model might be, it’s time for a change in the music industry. Things haven’t been working for a long time, and so far streaming simply isn’t profitable enough.

A peaceful outcome to this streaming war would be a healthier music industry, where both listeners and artists benefit. What we don’t want is a fragmentation of content, where certain artists will be restricted to certain platforms.

Only time will tell what’s going to happen next.

Perhaps Microsoft will launch its own music streaming service?