Nobody needs Apple’s streaming service except Apple itself


If you want to listen to streaming music, there are plenty of services to choose from. Spotify, Deezer and Rdio are probably the most well-known ones, but even the big Internet giants such as Amazon and Google have their own offerings. And now there is Tidal as well.

Typical for this business is that these services are all more or less the same. Minor differences in regards to user interface, features, pricing and the size of the available music catalog exist. But overall, what users get from the various players is pretty similar: Millions of songs and albums on demand, accessible across various types of devices either for free with certain limitations (and annoying ads) or at a price point of around 10 USD/Euro per month.

Traditionally, every new streaming service that launches does add very little value. But at least it can be considered a good thing from a competition point of view, since customers usually win if the number of companies that are courting them increases. However, the situation with Apple’s upcoming revamp of Beats Music, which the company acquired last year and which is designed to become the strategical successor of iTunes, is different.

Apple’s upcoming streaming service looks to be toxic to the ecosystem of digital music consumption. Nobody needs it. Ok, that’s the same as with any new streaming service. But the big issue is that Apple actively tries to sabotage other streaming services by trying to convince labels and artists to end support for free tiers and to get exclusive deals that no other service would benefit from. As media reports have indicated, antitrust officials in the U.S. and Europe are now looking closer at the company’s practices.

Apple behaves in an unacceptable way. Because iTunes music sales are decreasing, the company feels it needs to take over the streaming segment. But since it is late to the party, differentiation is so tricky and Apple’s track record with providing a user friendly iTunes software is not a great one, the chosen strategy appears to be to use the existing relations with the music industry heavy hitters to force the competition to weaken their products. Because only then Apple’s upcoming streaming service can shine.

But with its aggressive lobbying, Apple could have harmed its own position. Unsurprisingly, Spotify has decided to fight back. According to The Verge, the Swedish company has criticized Apple’s App store revenue share. Like other providers of digital goods, Spotify has to hand over a 30 percent cut of subscription revenue it generates through the iOS app to Apple. That obviously creates an unfair competitive advantage for Apple’s planned streaming service. For each 10 Euro charged to users of Spotify and Apple’s streaming service, only 7 Euro would end up at Spotify, but the full amount would go to Apple. One does not need to be an expert in antitrust law to see the issue.

Apple might frame its stance against the free tier as a support of the artists and music industry as a whole. But considering how iTunes actually destroyed the music industry, one should not rely too much on Apple’s expressed sympathies for the musicians. Apple does not care about what is good for music. It is my personal opinion but I see Spotify’s Daniel Ek as more authentic when it comes to the intention to support musicians. He started Spotify to end piracy, which might actually have worked (nowadays, who still downloads MP3 illegally?). What has Apple actually done for music, except promoting U2? I am not referring here to the consumer – the iPod and iTunes were certainly big deals from a consumer point of view when they arrived. But the iPod also thrived because of piracy. Apple simply created a great gadget to listen to all the music that people had downloaded through filesharing platforms.

If Apple wants to put its weight behind a music streaming service, so be it. But it should not act plain evil and hostile towards the competitor’s customers. A company with cash reserves of $178 billion can afford to not behave like a bully.

(Photo: Flickr/Per-Olof Forsberg, CC BY 2.0)

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