Apple’s ambition in music continues to be misunderstood. Most of the focus remains on the battle between Apple Music and Spotify for paid music streaming subscribers. However, the much more interesting development relates to Apple’s desire to grab music mind share. Apple is aiming to leverage its strong balance sheet to control the music narrative, and in the process, remove all of the oxygen from the music streaming industry.
Following the Beats acquisition, I see Apple striving to take back the music narrative with the goal of eventually owning the entire music industry. There are four distinct steps to Apple's strategy.
- Pivot into paid music streaming.
- Leverage a strong balance sheet to control the music narrative.
- Remove oxygen from the music streaming industry by grabbing revenue share.
- Create an environment for independent artist sustainability.
Although each step becomes progressively more difficult, ultimately, the four are interrelated.Neil Cybart
That sounds like a great plan! – if you’re the type of mindless Apple fan who thinks the world would stop spinning without the company. For the rest of us, this sort of strategy should send chills down the spine. Essentially, what the author speculates here is that Apple is planning to use its massive cash reserve to pressure both its distribution rivals (the Tidal acquisition may only be the first step) and the major record labels, to eventually drive them out of business and replace them, creating a massive monopoly. Which is the absolute worst situation both for users – who will probably see the free streaming tier removed and subscription prices going up – and for artists – if you’re complaining about low royalty payments now, wait until there’s a single major label on the market and you don’t even have the option of negotiating a better contract with the competition. Apple sure has some funny concepts about what constitutes competition.
The scenario sounds grim, but fortunately at the same time equally unlikely. For one, after the iTunes experience, the record labels are more wary of a single distributor owning the market; they are heavily invested in Spotify and will probably take measures to keep the competition alive to protect their interests. Also, even if Spotify and other streaming companies fail, large tech companies (Google, Amazon and Microsoft) are offering their own streaming services, so it’s fair to assume they won’t allow Apple to run away with the market.