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More speculation ahead of Apple’s big music announcement

By | Published on Wednesday 3 June 2015

Apple

As Apple’s Worldwide Developers Conference approaches, the Wall Street Journal has been digging hard to try to work out what the tech giant’s all-new music service will look like.

As much previously reported, the much anticipated souped-up iTunes is expected to be amongst the new products demoed at next week’s WWDC, even though all sources say none of the major record companies have as yet inked their deals with the new platform. But some very last minute contract signing may as yet occur – it wouldn’t be the first time – and either way, enough of the deal making has been done that Apple might feel confident enough to demo the new iTunes anyway. Postponement is still a possibility, insiders say, but it’s the less likely outcome.

The Journal’s sources confirm most of what we already knew about new-look iTunes: that it will combine the existing download store, a revamped freemium iTunes Radio service of the Pandora model that will finally be rolled out beyond the US, and a premium $10 a month on-demand streaming set-up of the Spotify model, with celebrity curation pushed to the fore.

The latter, of course, will be partly based on the Beats Music service Apple acquired, though it’s thought the Beats platform will continue to operate as a standalone set up while the new iTunes-with-added-stream gains momentum. The just over 300,000 people thought to be signed up to Beats Music in the US will then be transferred over to iTunes down the line.

Some of the newer nuggets of information contained in the WSJ article include confirmation that iTunes Radio will also include channels that operate more like conventional radio with human curation and DJs chatting between the tracks. This is where Apple’s big iTunes hire to date, Zane Lowe, could pop up, while those rumours that Pharrell Williams, Drake and David Guetta were being courted by the tech firm are being confirmed by various sources, with all three likely to curate and/or host channels on iTunes’ freemium side (though not for the mega-bucks fees previously mooted, insiders say; indeed it could be one of those “think of the great exposure” arrangements).

But both Apple and the record labels really want people to sign up to premium, of course, the great hope being that iTunes – which its massive user base – can sign up the kind of mainstream consumer yet to opt for ‘access’ rather than ‘ownership’ when it comes to digital music. The tech giant is expected to stage a huge marketing push for its new subscription music platform, and may even urge people buying albums in its download store to instead sign up to premium and get a whole load more music for the cost of an album a month.

Apple is seemingly banking on its ability to turn more mainstream consumers into subscription-paying streamers not just to regain its dominance in digital music, which has started to flag as download sales decline, but also to get the best possible deals from the record labels in terms of royalty rates. Word has it labels will be able to make album streams available on a freemium basis, but Apple is spinning this as a SoundCloud-style option, ie great promotion, but royalty free.

Though whether the new look iTunes will be the service to take subscription streaming mainstream remains to be seen. There are lots of reasons why it could succeed, but also several reasons why the labels should be nervous. The Journal says that the average iTunes user currently spends about $30 a year on music. Persuading that person to move to $120 a year is ambitious.

Even if Apple had persuaded the labels to opt for the slightly cheaper price point of $7.99 a month, $96 a year is still quite a hike for those mainstream users. Indeed, Apple originally proposed a $5 price point, the rumour goes, which would have been more realistic, though clearly iTunes entering the streaming market with the same service as Spotify at half the price would have screwed over the very company that is currently behind the record industry’s main growth revenue stream.

So the labels insisting on a $10 a month price point is understandable, though fans of pessimism will enjoy worrying that iTunes premium will mainly sign up two kinds of consumer: existing $10 a month subscribers that will be poached from Spotify et al, lured by Apple’s exclusives and hype, and existing big download purchasers on iTunes who are already spending $120+ a year on digital music. Which might be good news for Apple, but it doesn’t really help the music industry.

But hey, look at me, all doom and gloom before the all-new iTunes is even out the door. Pharrell! Zane! Radio! Streams! Beats! Woo!



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