Long ago during Apple’s Golden Era, in the legendary magical days of Cupertino, King Jobs orchestrated flawless new technologies. Each became more successful, (and profitable) than the one before it and fans would line up in the cold for days waiting to get their hands on the King’s newest Apple creation. The iTunes store flourished, setting new digital download sales records. The news media became like Knights Of The Round Table falling under the Cupertino spell and spreading news of each new invention throughout the land.
But hey, wake up and smell the coffee Ethel. Those days are past. Perhaps not completely forgotten, but things have changed since King Jobs sadly died and the kingdom passed into the hands of a Cook. Today we find Apple at a complex crossroads.
The music and technology landscape is littered with challenges facing Apple and its competitors, mighty knights like Google, Amazon and Samsung. Digital download sales have leveled and are starting to decline. For the first 8 weeks of 2014 U.S. digital album and track downloads were off 13 and 11 percent respectively. Also, Android mobile OS has eclipsed the Apple’s IOS. Gartner claims that sometime this year, Android will surpass 1 billion active users. Lastly, according to the latest IFPI report (International Federation of the Phonographic Industry) global revenue from subscription and music streaming services jumped by 51% in 2013 passing the one billion dollar mark for the first time. The dual worlds of music and technology are fast dividing into two camps—Ownership (downloads and files) and Access (subscription and streaming). And Apple has also reached a crossroads where it has to decide if it will remain exclusive or become inclusive with respect to the huge universe of Android users. Finally, Samsung and Google are jumping into the wearable markets with smart watches and more. As yet, that challenge has been unanswered by Apple.
So, it’s not surprising that we are seeing a rash of articles about Apple’s possible plans to create a Spotify type service, with an Android app and its talks with Comcast to solidify the delivery of music and video to consumers. In short, this may be the most competitive moment in music industry history, as an increasingly larger group of players jockey for key positions in the fast developing consumer-driven musical landscapes.
“To make any streaming TV product work, Apple needs the cooperation of broadband providers,” says Washington Post blogger Brian Fung. “That’s a market Apple has neither the scale nor the expertise to enter on its own.” According to reports, Apple is hoping to negotiate special treatment for its video traffic to insure that its Apple TV consumers have a smooth trouble-free experience. “It’d be a major blow to the company [Apple] if it launched a streaming TV service that stuttered and lagged because of congestion problems.” Both Reuters and the Wall Street Journal have printed reports of talks between Comcast and Apple. Previously Apple was reportedly talking with Time Warner Cable about a similar concept, but now Time Warner has agreed to be purchased by Comcast. These kind of deals are not unique to Apple, just last month Comcast agreed to insure faster speeds for Netflix customers in return for payments from the House of Cards video streamer.
CNET’s Donald Bell offers a humorous look at the Top Five most disruptive things that Apple could do with its $158 billion in the bank. Bell suggests purchasing Netflix for $26 billion as the fifth best thing, but ends up squarely on point as he says, “Apple could own the keys to America’s Internet by purchasing Comcast for about $132 billion and get TimeWarner and NBC to boot.”
And what about Apple’s musical plans? There is talk about iTunes preparing more exclusive releases, to mimic what happened with Beyonce’s pre-Christmas highly successful album bonanza, but few see that as a long term solution. iTunes Radio was a first attempt to enter the streaming space, albeit in a free, ad-supported manner but it may have been too little, too late.
A Billboard report suggests a Spotify or Beats Music type on-demand site is in the works and predicts that Apple will break precedent and include an Android app, too. If this report proves true, it could be the beginning of an all out competitive war for subscription payments from consumers. In fact, hoping to fend off competition, Spotify is now offering a new half price student rate for its premium service.
Stuart Dredge reveals in the Guardian a 7-point plan to help Apple gain the upper hand and grab marketshare. Some of his ideas include, Better Music Discovery Features, iTunes For Android and Be The Most Artist Friendly Streaming Service. Dredge quotes Thom York who calls Spotify, “The last desperate fart of a dying corpse” (the corpse being the major label music industry) and quotes David Byrne who asks if streaming services are, “Simply a legalized version of file-sharing sites such as Napster and Pirate Bay— with the difference being that with streaming services the big labels now get hefty advances.”
Is Apple falling behind, already too far behind to catch up or about to take a giant leap forward? That remains to be seen. But with its massive iTunes database the company has a powerful launch platform that is the envy of many of its competitors. But there are also hardware threats on the horizon like Google’s fast improving and highly affordable Chromebooks. For now Cupertino’s Golden Age remains in the past. But who knows what the future might bring?