Apple’s New Music Streaming Service Could Revive The Recording Industry
Apple Inc. is poised to unveil what analysts and record label executives hope will be a game-changer in the way consumers listen to music.
Taking on the likes of Spotify and Pandora, the Cupertino, Calif., tech giant is expected to announce a $10-a-month streaming service and revamped Internet radio feature at its developer conference in San Francisco on Monday.
The music service would come 12 years after Apple revolutionized the music business with the iTunes store and started charging 99 cents a song. Then-Chief Executive Steve Jobs called that development “groundbreaking,” and Apple eventually became the biggest music retailer in the country. “Subscriptions are the wrong path,” Jobs said at the time. “People have bought their music for as long as we can remember.”
But much has changed since the heyday of the iPod. Apple is suffering from the worldwide decline of digital downloads as young people increasingly turn to streaming online, craving inexpensive access to virtually unlimited music instead of adding tracks to iTunes libraries.
Now the record industry is looking to Apple to bring subscription-only streaming to the masses and help reverse years of declines in the global music market. The launch would follow Apple’s $3-billion purchase of Beats, founded by music moguls Jimmy Iovine and Dr. Dre, last year.
Record labels are counting on streaming to make up for the decline in digital download sales and the collapse of the CD market. Downloads fell 8% worldwide in 2014, according to the International Federation of the Phonographic Industry. Meanwhile, the IFPI reported revenue from subscriptions is growing fast — up 39% last year.
The music labels hope the stockpile of credit card numbers Apple has on file will translate into heaps of new streaming customers and big royalty payments. Apple, now led by Tim Cook, is in a strong position to make that happen. Its iTunes store has 800 million user accounts, giving it access to a huge market of potential subscribers.