You know that feeling opponents would get when Michael Jordan used to step on the basketball court? We imagine that's what streaming services like Spotify and Rhapsody are feeling right about now as news spreads that Apple's about to become a direct competitor. Having built up iTunes into what it is today, Apple shouldn't have much trouble rolling out a streaming service that's capable of competing with established players.
After all, iTunes is where most music is sold these days, and that's been true for very long time now. So even though Apple is late to the party, it has the advantage of being home to hundreds of millions of iTunes customers, many of which have already forked over credit card details at one time or another. The challenge will be to convert them into streaming subscribers, and with proper device integration, that might not be all that difficult.
We'll soon find out. Apple is reportedly rolling out its streaming service next week, provided it can finalize deals with all the major music labels. It will cost $10 per month, which is the same as Spotify, though Spotify offers a 50 percent to students as well as each extra account in the family. It's not yet known if Apple will allow more than one user in a family to share an account or if it will offer a discount to additional family members.
One advantage Apple will likely have is the full support of the music industry. A point of contention between Spotify and some artists and labels is that Spotify offers a free, ad-supported option. Taylor Swift yanked her songs off of Spotify because she and her label didn't want her music available to non-paying subscribers, while Spotify countered that it's paid over $2 billion in royalties to artists, labels, and songwriters to date.
This won't be an issue with Apple, as it will only make a comparatively small collection of songs available for free listening. We read that to mean Apple is willing to play ball with artists and labels who don't want their songs streamed for free, regardless of the advertising revenue.
What's interesting about the move is that Apple dominates the music download business -- it's estimated that Apple sells up to 85 percent of the world's downloaded songs. Selling a subscription-based streaming service will undoubtedly cut into those sales, though Apple seems to think it can make more money through a streaming business than by selling songs and albums outright.
It's a gamble, but one that's attractive when looking at the numbers. Last year, some 110 million people purchased music via iTunes, spending an average of $30 over 12 months per person. Apple's gambling that it can convert a significant amount of those users into streaming subscribers who would then be spending $120 per year.
What's your prediction, will Apple be a major player in the streaming music sector, or will it have a tough time competing with the likes of Spotify and Google Music?