There are very few areas where music and streaming executives agree. Apple Music, seemingly, is one of them.
"I think I’ve never been more confident," an executive at a streaming music company told The Verge following the Apple Music announcement. "We were all bracing ourselves, but we feel really good about it right now."
Streaming music providers, so far, are breathing a sigh of relief after learning what Apple Music is — and isn’t. Spotify CEO Daniel Ek made his thoughts known. Multiple executives throughout the music and streaming industry have made it clear to The Verge that while it would be a success, they don’t believe that Apple Music will have the same industry-altering effect as its predecessor, iTunes, once had.
"We were all bracing ourselves, but we feel really good about it right now."
Apple Music is essentially a combination of iTunes, Spotify, Pandora, and social elements of services like Tumblr and Instagram — along with a streaming radio channel called Beats 1, manned by high-profile radio hosts Zane Lowe, Ebro Darden, and up-and-coming host Julie Adenuga. Music executives have been very upbeat about Beats 1, with one comparing it to when Sirius signed Howard Stern and quickly began to grow its subscriber base. "I think it’s a proven way to get people into a new service," the music executive said to The Verge.
Apple is building a studio at Beats headquarters in Culver City, California, which will be used to house Lowe and his Beats 1 production team, the company confirmed to The Verge. Apple is also planning exclusives for its streaming service, which will likely last for one to two weeks depending on the artist, according to sources. With Apple Music launching in over 100 countries — including China, according to a source — Apple is giving its music service a global push unlike any initial launch we’ve seen from the company before.
Despite that push, players on both sides of the industry don’t think Apple Music’s success will be to the detriment of its competitors. "I honestly don’t think they’re trying to get anybody to switch [from competing services], I just think they’re trying to turn on the people who haven’t already turned on," a music executive said. "I think there’s definitely room for all of these [streaming services] in here."
"They basically want the freemium model."
While Apple has reportedly been aggressive in pushing the labels to kill off the free tiers of Spotify and YouTube, its own offering doesn't stray too far from the freemium model. One streaming executive noted that Apple essentially has the same model as Spotify: Apple Music features the same free radio and paid on-demand setup, albeit without Spotify’s free on-demand desktop offering. "They’re trying to put a spin on it, but they basically want the freemium model," the executive said.
The one thing the music and streaming industries are hoping for is that Apple can draw new users into the fold. The company is widely seen throughout the industry as the entrant who can lift the fortunes of both music labels and streaming companies. The music industry isn't counting on Apple to battle the existential threat, as it did against piracy with the iTunes store. Both industries are banking on the undoubtedly massive amounts of marketing dollars that Apple will throw behind Apple Music to grow the streaming industry faster than it would otherwise. "Apple is the one player that can really accelerate [growth]," a high-ranking streaming executive said.
"Pandora has 80 million listeners. There’s no way Apple upsets that apple cart overnight."
But executives in both industries agree that Apple won’t dominate streaming like it did with iTunes and music downloads. "That’s crazy," the same streaming executive said when asked if Apple would end up dominating the streaming market. "Pandora has 80 million listeners. There’s no way Apple upsets that apple cart overnight. Does Apple get to 15 million [paid users, matching Spotify’s numbers] in the first year? That would be the interesting bet," the executive said. A music executive echoed the same sentiment. "Are they going to be like 80 percent of the market like they were with downloads? I don’t know that you could say that."
Complacency has never treated Apple’s competitors well — just think back to the iPhone — so it’ll be interesting to see how many subscribers Apple can draw through advantageous family pricing, major exclusives, and the fact that its music service will ship on every iPhone. Apple’s success in the music industry over the last 15 years is unparalleled, and it’s unlikely the company has lowered its goals. While streaming services may not fear Apple as much as they did yesterday, the labels are still hopeful that Apple’s entry forces the entire industry to improve its offerings. As one label executive put it, "When Apple’s in there, everybody plays their best game, and I think we’re going to see that."