Music Streaming: Apple and Beats vs. Spotify

Streaming music is not going anywhere and it is interesting to watch the music industry scramble and big players emerge. The de facto industry lead is Spotify with over 15 million subscribers.

But Apple has always been big into music. Their meteoric rise under Steve Jobs in the early 2000’s was sparked by the iPod. And though they weren’t the first to innovate with music streaming, with a valuation of $700 billion they had the money to purchase a competitor to Spotify for $3 billion.

Many criticized this purchase immediately after it happened, but taking a look at their long-term plans and the outlook in the industry, many have started to applaud the decision. Recent reports show that they will be adding Beats into their mobile operating system, but under their branded music service, iTunes.

This might be a brilliant move because iTunes already has a large number of users that use the service, have their credit cards on file, and are loyal customers. This sets the stage for a potential new leader in the streaming music space, because Apple would only have to convert 2% of their customers to paid streaming to become the leader. And remember, Apple’s customers are hyper loyal so this is not a far-fetched idea.

This all comes at a time where artists and stakeholders are publicly upset at the free streaming offered by Spotify and others. Spotify has a price point of $9.99 for their paid tier to support the ad-supported free service, if Apple acts as expected and eliminates the free tier they can undercut Spotify’s (and the industry’s) price. Many are putting that number as low as $4.99. This may not immediately be a profitable price point for the company but it would keep people loyal to their company and it would eliminate their competition.