Apple’s streaming music service may come next week

2 Jun 2015 | Author: | No comments yet »

Apple to announce new $10-a-month music streaming service.

Apple is getting ready to announce its answer to Spotify at its Worldwide Developer Conference (WWDC) in San Francisco next week, according to a Wall Street Journal report. At WWDC next week, Apple will finally unveil its new music service, a revamped version of Beats Music, combining a $10-a-month on-demand streaming subscription with a bevy of free, ad-supported radio stations curated by celebrity DJs.Apple’s revamped music service — expected to be unveiled during Apple’s 2015 Worldwide Developers Conference next week (June 8-12) — has at least two confirmed faces: Drake and Pharrell Williams, according to multiple sources familiar with negotiations.

Much like its competitor, Apple’s service will be priced $10 a month for unlimited streaming; however, it looks like there won’t be any ad-supported on-demand tier. AAPL, +0.20% is again trying to change how consumers listen to their favorite songs with a new subscription streaming service and a renewed push into Internet radio.

Billboard first reported the news in April, which Williams all but confirmed several days later when he was spotted wearing a pre-retail Apple Watch during the April 6 telecast of The Voice. Details of the artists’ respective involvement is unclear at this time, though a May 31 report from the New York Post suggested that Drake, Pharrell and David Guetta would be three of several celebrity “guest DJs” for a revamped iTunes Radio, the result of a year’s worth of integration with Jimmy Iovine and Dr. Apple is thought to be basing its business partially on its Beats acquisition, though the company will apparently continue to offer Beats Music after launching its new streaming music service (which will probably carry iTunes or other Apple-specific branding) for at least a little while to ease the transition.

The Journal notes that Apple hasn’t finalized deals for its subscription service with the major record labels, so there is a chance that an announcement may be postponed until the ink on those deals is dry. Data compiled by Nielsen SoundScan showed that in 2014, download sales revenue fell by 8 percent ($3.6 billion), while streaming service revenue surged by 45 percent ($1.6 billion). Some tracks could be offered free, per the WSJ, which also says Apple will introduce it in a software update for iOS, and via a standalone offering for Google’s Android mobile platform as well. Spokespeople for Apple, Drake and Williams declined comment, though one knowledgeable source shot down the Post’s claims that Drake would be paid $19 million for the deal: “Apple doesn’t normally pay artists for those types of collaborations,” the source explained.

So far, it still needs to sign agreements with Sony Music Entertainment, Universal Music Group, and Warner Music Group — the three largest music companies on the planet. Billboard has also learned that Drake was poised to be one of the 16 artist partners of Jay Z’s Tidal, but dropped out as late as two days before its March 30 launch event in New York. Sources say that Apple is close, but a worst-case scenario where Apple delays next week’s promised announcement to finish up negotiations is still possible. Apple could possibly promote its revamped Beats Music with a free trial, and it will allow record labels to make select songs available for free listening—much like YouTube and Soundcloud do now—to help launch new artists or tease upcoming albums.

Music-industry executives see Apple’s all-in bet as a watershed moment for streaming music that could move the technology from early adopters to the mainstream. Apple’s project after the announcement is to differentiate its product from the likes of Spotify, which currently owns more than three-quarters of the global streaming market. It acquired Beats Electronics for $3 billion a year ago, and as part of the deal also got its hand on the company’s Beats Music subscription service. Why it matters: Apple’s success in music streaming not only will justify the company’s $3 billion acquisition of Beats last year, but it could also signal a turning point in the music industry.

Apple can aggressively push its hundreds of millions of iTunes customers—most with credit cards already registered with the company—to embrace a subscription model on the same devices where they listen to downloaded songs and albums. That same week, the Federal Trade Commission started investigating Apple for potential antitrust practices by reportedly pressuring the major labels to phase out Spotify’s free subscription tier.

To do that, it’s reportedly developing an Android app, which is certainly a departure from other mobile Apple services and gives it access to listeners outside iOS. While artists and record labels have been weary of streaming as a sustainable business model, the fact that Apple accounts for 80 percent of music sales around the world could be the player needed to make streaming profitable.

Apple’s service, at $10 per month, would compete on equal footing in terms of cost with rivals including Spotify and Rdio, but it sounds like a wide selection of human-hosted content could also make it a formidable rival to something like satellite or traditional terrestrial radio, which, in addition to select free content, might help attract a larger audience. People familiar with Apple’s thinking say the company—the world’s leading music retailer—is prepared to cannibalize its download business in favor of streaming, which has been gaining traction world-wide. It has also proven adept at expanding its media offerings internationally – or at least more adept than major rivals including Google and Amazon in that regard. Apple’s monthly streaming service would increase that annual spend to $120 per consumer, even higher than it was during peak CD sales, but the model requires a larger userbase. If Apple can convert its customers who already use iTunes to purchase songs to paying streaming listeners, it could mark a shift in the entire music landscape.

Although neither party seems to be breaking a sweat. “If any company can pull it off, they can,” one music industry source told Billboard, when news of the stalled negotiations first came to light last month.

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