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The announcement this week that Apple Music will soon overtake Spotify in paid music subscriptions in the United States hit a plaintive agreement for those of us who are paid to take care of them. ;them. Like the race touts, my sad coterie of business reporters from the aging music crumple their tickets into the abatement as another potential competitor for big tech companies stumbles. Betting the favorite is never fun – and rooting for Apple is like rooting for gravity. But that 's where the money is.
I've always preferred Spotify to Apple, and I've been subscribed for seven years. I admire the pioneer business model; I appreciate how it saved the music industry from hackers; I'm used to its sticky user interface; General Manager Daniel Ek reminds me of a cartoon villain. Yet, once Apple Music launched in 2015, I feared that the company would be doomed.
million. Ek stated that he believed that streaming music is not a win-win model. In the short term, he is right. Spotify still reigns in Europe, and there are large expanses of virgin territories in the developing world. Apple, by and large, does not spit out existing Spotify customers, and both companies are growing rapidly. But Apple is growing faster. Spotify remains more important, and will approach 100 million paying subscribers by the end of 2018. But to justify its stock market valuation of $ 30 billion, it must dominate.
This is not television, with space for several winners. HBO and Netflix are complementary services; Spotify and Apple Music are not. A music subscription per household is enough. Attempting to differentiate themselves, Spotify has invested a lot in a man-machine "algotoriale" approach to the selection of playlists. In reality, artificial intelligence is redundant; When a song becomes viral on the Spotify playlist, it usually appears on Apple in a few hours, and vice versa. The remaining distinction is the color scheme: Apple is calm and white. Spotify is elegant and black.
A huge amount of money was lost – excuse me, invested – in the growth of two almost identical services. Spotify shareholders are banking on long-term profitability, but the monopolistic money they desire will be competing in a fragmented market. Even in a duopoly, Spotify would fight against Apple's biggest record and built-in hardware – and that ignores Amazon's Prime Music and Google's YouTube. (You can make fun of Tidal in private.)
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Apple, with $ 127 billion in equity, can afford to lose more; perhaps indefinitely, if even a fraction of Apple Music subscribers can be persuaded to buy AirPod $ 150 wireless headphones. Spotify is a pure game.
If he fails to retain a majority market share, Spotify is facing a sad future. As the streaming market becomes saturated, the company will serve a dwindling base of base subscribers, who will pay their monthly fees more by tradition than by enthusiasm. It will make profits, intermittently, but will eventually struggle to earn above its cost of capital. It will be renamed, without success, then rebrandage. And then, hungry for new investments, it will inevitably start to shrink.
Meanwhile, Apple, after curbing competition, will fold its Apple Music segment into a larger business sector. For musicians and fans, the economy of the industry will become opaque. The music itself will become a leader of the loss, first for AirPod sales, and later for a whimsical new device that will completely skip the ear and go right to the brainstem.
Am I the only one to find this distressing future? Another victory for the biggest company in the world? Another dismal product launch, with another middle-aged man in stale holding barking at a crowd of feverish nerds? Another product manager explained why the world's first $ 1 billion technology company boldly chose to partner with Drake?
I can not take it. Bring back the pirates.
The author is the author of & quot; How Music Got Free & quot;
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