Apple Announces Streaming Music Service To Take On Spotify And Pandora

Apple Announces Streaming Music Service To Take On Spotify And Pandora

At the company’s annual Worldwide Developer’s Conference, Apple saved its big Apple Music announcement for the last keynote.

After a relatively boring day, focused on technical enhancements to its PC and iPhone operating systems, the audience finally got a peak at a brand new product.

Apple Music, its streaming service to compete with big players Pandora and Spotify, will feature personalized recommendations, curated playlists and streaming access to Apple’s huge library of music.

In return users will pay a monthly subscription fee of $9.99 for a single-user plan or $14.99 a month for a six user family plan. While the single user price is the same as virtually all other streaming services, the family plan is notably cheaper. That’s an interesting move for a company that is usually the highest priced.

Apple hopes to set itself apart with the launch of Beats 1, a new global radio station led by former BBC DJ Zane Lowe. This will replace the free, ad-supported level that most streaming services offer.

The company touted Connect, an in-app social network where artists share photos, lyrics, and remixes, and speak to fans. Whether this gets used or collects dust remains to be seen – there are already a bevy of places to do all this (Facebook, Twitter, Instagram, Soundcloud, Mixcloud etc..)

Right now, Apple Music looks like a very convenient cash grab for the device maker. Apple already has user credit cards and an install base of over 100 million in the U.S. alone. Assuming it has 400 million in use worldwide, and can get Apple Music running in most of those markets, that’s a large number of potential users.

Apple will also push the software out to users, avoiding the usual marketing spend needed to get installs.

At $10 a month and 100 million users that some serious money. Granted Apple will only get maybe 25 percent of this, but its still notable. A more importantly recurring.

The recurring is nice for Apple because the money will just show up every month. That’s a nice stable stream of cash that gets added for relatively little work. More importantly, though, it creates yet more stickiness to Apple products. By making it easy to get high quality streaming music on your iPhone, people are less apt to switch phones.

And that’s probably the real play here.

While there remains much to be seen about Apple Music, particularly can it convince users to sign up for monthly subscriptions and is it better than rival apps of varying sorts, Apple Music is a low risk, no-brainer bet. Its the type Tim Cook likes – predictable and nothing that, should it fail, will really rock the boat.

Apple gets to stay laser focused on devices, adds a nice revenue stream and if the whole thing doesn’t work no big deal – Apple TV hasn’t been setting the world on fire and nobody seems to care. If Apple Music went that way the result would likely be the same.

Apple Music will launch in the United States and other western markets June 30th with a three-month free trial, 2 months more than competitors at present (though expect a massive marketing push by the competition around the end of June).