Thursday, March 26, 2015

Will Apple And Beats Gain Edge In Streaming Music

Apple sure has a lot on its plate with the release of the Apple Watch, a planned Apple TV subscription service, and a refreshed Beats streaming music service.  The NY Times article talks about what Apple is able and not able to do to compete against Spotify and Pandora.  According to the report, "Apple recently tried but failed to persuade record labels to agree to lower licensing costs that would have let Apple sell subscriptions to its streaming service for $8 a month — a discount from the $10 that has become standard for services like Spotify, Rhapsody and Rdio."  But does Apple really want to play the low cost angle to compete?

It may be telling that Apple has not tried to undercut its iPhone or iPad price to gain an edge over Android or will use a low price strategy for its Apple Watch release.  So why start now.  If history is a guide, what Apple does exceedingly well is create demand by focusing on unmet needs and delivering uniquely a product or service that works simply and efficiently.  So in the case of the competitive music streaming market, Apple and Beat's success must deliver unique benefits that consumers will desire. 

Apple may just have the products and services to achieve early gains.  The Beats music service could be pre-loaded into the next iteration of iOS.  A Beat's subscription could be included with every Apple TV video subscription.  And synergy with iTunes could help Beats push music purchases.  Content is king and building a library of exclusivity will be important to demand.  Perhaps, a unique deal with Taylor Swift, U2, and others may be a driving force.  Lastly, customization and personalization remain key to build a music subscription service that delivers unique value and enjoyment.   Can Apple Beats gain market share verse the current batch of competition.  I suspect that Apple has a plan.

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