Compare that to Spotify, which is building its entire business around music streaming. Spotify is in a jam right now: the more money it makes, the more money it loses, because of how its deals with the labels are structured. Spotify needs a free service because that’s how it gets people in the door and convinces them to pay, but the labels hate the free service because it doesn’t pay them enough. Spotify needs to add subscribers at a high rate to cover the revenue gap; the best way to add more subscribers is to aggressively sign people up for the free tier, increasing the revenue gap. The flames climb ever higher into the night.
Apple doesn’t have any of these problems, because it just wants people to buy iPhones. You can pay the $9.99 a month for Apple Music and unlock almost all the songs in the iTunes library, or not. It’ll barely dent Apple’s balance sheet either way; the company is doing a music service because it likes music and sees the writing on the wall as digital downloads collapse in favor of streaming services. Spotify has to invent an entirely new business model, but Apple just has to make listening to music marginally easier.
The entire music industry, turned into just another feature of the iPhone.
Now, Apple News could be terrible — it’s built on the wreckage of Newsstand, which did not exactly save the print industry. And parts of Apple Music sure feel like Ping, which has a special place in Apple’s Hall of Pretty Bad Ideas. But none of these products are existentially important to Apple; they’re just features, ways to make the iPhone more compelling and interesting. That’s sort of incredible; it’s hard to think of another company that can just subsume an entire industry in the service of making its products more attractive.
Nailed it. This is why Apple will undoubtedly prevail because they make the hardware that people use to listen to their music on and Apple sells a lot of iPhones.