Despite a host of new announcements made at 2015's Apple Worldwide Development Conference, the biggest was decisively the company's reveal of its new streaming music service, Apple Music.
Streaming services aren't nearly as unique as they were back when Myspace had the premiere music player on the internet. That means if Apple wants to find success in a crowded field, its going to have to overcome some pretty steep obstacles.
The streaming giant has been dominating the streaming service industry for a couple of years now. According to a news release from Spotify, the service now boasts over 20 million paying subscribers and over 75 million active users. The service offers a free desktop program which can be used to stream anything in the catalog for free, as well as a free mobile app that acts primarily as an internet radio service like Pandora. Apple Music is not debuting into a relatively un-tapped market like the Apple Watch did earlier in the year, millions have already chosen their streaming service meaning Apple Music will have to do something truly distinct in order to succeed.
Generating Meaningful Revenue:
Don't let all those fancy user-statistics Spotify boasts about fool you, the company is still yet to turn a profit from all of those subscriptions. Something like 70 percent of Spotify's revenue is getting lost to pay royalties, according to the Guardian. There's little difference coming from others like Rdio or Pandora, and much of the remaining revenue has to go to the general maintenance and costs of running a modern digital platform. Apple will benefit from having an already established vat of wealth, but will run into the same royalty issues as the others. And even if Apple Music is able to steal 15 million of Spotify's paid subscribers at $10 per month, that revenue would account for less than 1 percent of the company's 2016 total, according to appleinsider.com.
Winning Over the Artists:
A lot of artists, and some pretty important ones at that, do not like Spotify very much. Notable artists like Adele and Beyonce have adopted a strategy that keeps their new music off of Spotify for several months after release, while some, such as Taylor Swift, have elected to keep their music unavailable through the platform entirely. Many artists just don't feel like there's any money for them to make through streaming services, especially compared to traditional CD and digital sales. While the lack of support hasn't exactly hurt services like Spotify and Pandora, Apple's biggest weapon could be the potential to win them over. If Apple could bring on someone like Taylor Swift, or convince artists like Beyonce and Coldplay to release their albums for streaming on the day they come out, it could sway pop fans away from competitors.