How would Apple change the way we consume music?
The 20th century music business primarily revolved around sales of albums, which were typically made up of 10 to 12 songs and priced accordingly. Though Digital Music had been around for a while, it was iTunes that brought the second age of music business, in which consumers focused their purchases mostly on individual songs at a price point as low as $0.99/track. Today we are in the third age of music business, which is witnessing the growing importance of streaming services. These services have rendered the ‘price per track’ metric practically useless and offer more or less equally huge collection – limiting any chance of differentiation to a player’s ability to create a positive influence on consumer behavior.
What have Apple done, or are doing, to positively influence consumer behavior? Long story short, they are creating an ecosystem around their music app. Apple Music is not just a peripheral program for music management, its deeply integrated with other elements of the operating system – integration with iTunes enables you to view your downloaded and ripped music side-by-side with your streaming subscription; integration with Siri ensures easy look-up of your favorite song or artist in all of Apple Music catalog; integration with GarageBand allows you to publish sample of your music directly to Apple Music Connect (if you are on the platform).
This integration is not limited to software only. After a gap of 3 years, Apple recently announced the launch of the new series of iPod Touch, signaling a greater music focus in their device strategy. Not only will the upgraded iPod Touch support Apple Music, it will also feature a bigger battery and the A8 processor, which is 25% more powerful than the older A5 and consumes 50% less energy – features much needed to search for a particular song from among 30 million others, or to play a live 24x7 radio. As a side note, no major upgrades were announced for iPod Nano and Shuffle.
In recent years, the sales of iPods has declined – in Q2 of 2014, Apple reported a 24% YOY decline in iPod sales. This decline is attributed to people increasingly listening to music on their smartphones. As a result, Apple would like to re-position the iPod Touch to appeal to non-users of smartphones – kids, teens and young adults who are not allowed a cellphone or can’t afford a cellular service, but still like to access iOS apps – especially the ones related to social networking, gaming, and music. Interestingly, a survey conducted by the Edison Research found that these kids, teens and young adults are also the biggest consumers of subscription music. With more users in this demography wanting in on the $14.99 family plan of Apple Music, the expectation is that new iPod Touch will fuel the sale for Apple Music and vice-versa.
The final element of Apple’s music ecosystem is the iTunes Music Festival, which is held in the UK (and recently in US) every year, and streamed live to rest of the world on iTunes. It’s well known that artists make most money from concerts, but more than money, iTunes Music Festival is especially coveted by artists because of its local execution with global outreach, and many artists release new music at the event. A combination of best sound quality, light arrangement, stage setup, and top quality acts have already made the event well received among fans as well. Though there are no announcements or signals to that effect yet, it will not be surprising if Apple decide to turn this annual, month long, local festival into a year long, global music celebration.
Whether or not Apple Music stays relevant in the long run, there is little doubt that Apple has taken a multi-pronged approach to deliver music to fans – their software (Apple Music) is excellent, catalog (iTunes) comprehensive, and hardware (iPod) great. That said, this jumbo-combo is still not a game changer. What else can apple do to change the game? Well, that would be the subject of the next installment in this series.
Post A Comment:
0 comments: