iTunes & Apple Music vs Spotify: when will the fat lady sing?

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The illustration above is of some of the ways you can choose to consume music in the 21st century. But despite the plethora of choice, most of us pick one, or two at most, and stick to them.

And for hundreds of millions, the main choice till recently has been iTunes.

So here are some statistics to surprise (or even shock) you. But first, the background.

iTunes has 800 million account holders worldwide.

Spotify has 75 million users worldwide.

So – game over, then.

Except, as we all know, it’s never over till The Fat Lady Sings.

Do you remember the VHS-Betamax wars?

In reality, it was more a series of battles in a war that was won before it began.

In the UK, the war was over when Radio Rentals signed up to the VHS model to rent alongside their televisions.

It didn’t really matter that Betamax was a better system. Radio Rentals meant that most UK households were going VHS. At best, Betamax might carve out a niche market. But, really, it was never going to happen.

In America, it came down to a choice between cost – VHS machines were cheaper – and recording time. VHS tapes could hold up to two hours of programming; Beta managed half of that.

So the two most important markets in the world made their choice early on. As a  consequence, VHS prices dropped rapidly, and recording time went up to three hours, four hours.

How does any of this apply to music streaming?

You would think that iTunes 800 million accounts and Apple’s reputation would easily see off the upstart Spotify and its measly 75 million users.

Except….

Apple’s target was 100 million users of its subscription streaming service.

That, right there, would have transformed the record industry, reversing its apparently inexorable decline and putting it back in growth mode.

But Apple’s new streaming service, iMusic, claims a sign-up of 11m users to its three-month free trial. That’s a paltry 1.3% of its already captive audience.

Spotify has 20 million actual paid subscribers among its 75 million users. That’s better than 25% of its own captive audience. And the growth of free users is slowing, while the take up of subscriptions is growing.

Now, how did that happen?

Truthfully, I never thought streaming would work. At the point Spotify launched, I was trying to finance the launch of a website that would be a combination iTunes/Facebook for the over-50s.

One of my partners, Luke Broadhurst, was adamant we needed an element of streaming in our business model. Reluctantly, I created a new line in the Excel forecast sheet.

But in reality, I just didn’t see how not owning the music was going to work. OK, an mp3 file was not the same as a CD, which was not the same as an LP. But still, you paid for the mp3, and it was yours.

I was also outraged at the barefaced cynicism of the record industry majors, who each took (this is from memory) a 12.5% share in Spotify in return for providing their music to the site. They literally gave away the store, the thing they owned, for something that would return nothing.

Well, I was wrong about that. This year, Spotify will pay the record industry $2bn, twice what it paid last year, which was twice what it paid the year before. It won’t be long before Spotify’s contribution represents 25% of the industry’s income.

Of course, there’s still the problem that the labels aren’t passing that money on to artists and writers. That’s another story, and about that I am still outraged.

But my outrage doesn’t change the simple fact that the public, more and more, is choosing streaming over owning.

And that doesn’t answer the question of why Spotify has twice as many paid subscribers as iMusic has managed to sign up to its free-trial.

I’m one of the 11m who has signed up to the iMusic trial. Will I convert that to the subscription model?

The answer is, I don’t know.

For a start, the interface is a mess, which is the last thing you expect from Apple.

Well, it would be the last thing you’d expect unless you’ve recently updated your iTunes.

Some people might say you can’t give all the credit for Apple’s success to Steve Jobs. Me? I’d say they’re wrong. There is no way the latest iTunes iteration would have happened on Steve’s watch. Ditto the iMusic launch.

I know The Fat Lady hasn’t sung yet. But as the editor, and later owner, of some of the very first video magazines (starting in late 1978) I personally went for VHS. I covered Betamax, of course I did. But I knew Sony had lost that war almost from the day I signed my own rental agreement for a VHS model.

I don’t know quite what Apple could do to recover its position as the pre-eminent music supplier. There’s no new iPod-type device in the offing, which is how the company first established its dominance.

And it is really pissing off iTunes users. (The latest update messed with cover artwork. Believe me, with 20,000 tracks, and cover art attached to all but a few, I would go mental if my cover art suddenly disappeared, which has happened to many users).

I still don’t like Spotify. Maybe the Premium (paid) service is better. But I’m not prepared to spend the money to find out.

But at any given time, Spotify represents roughly 50% of worldwide streaming. Which means that 50 million people are already paying their £9.99 (or similar) per month to someone – Spotify, Pandora, Deezer. Compared to that, if Apple converts all 11m trial users to paid, they’ll still be way behind in the game.

Meantime, I can’t make any sense of the iMusic service on my iPhone, and I keep finding tracks in my iTunes library that are ‘not licensed for iCloud use’, or some such bollocks.

I remember the time when it seemed Apple was going to fade into oblivion. I moved over to PC. Hating Microsoft as I did, I stuck with it for a year on the pragmatic basis that I had no choice. But then Steve Jobs went back to Apple, and the sun came out.

Steve Jobs ain’t coming back this time, and his Apple is looking very bruised.

In a way, that’s healthy. No-one should dominate the way iTunes has done. But it was so glorious, so graceful, so bloody easy to use. But this is the digital age, and things move fast.

Nothing – not even the best – lasts forever.

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Driver 67 is a one hit wonder. He still hasn't given up hope that he might become a two hit wonder. In the meantime, he has a lifetime of stories and adventures in the music industry to keep him warm at nights.

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