Ap­ple wants a lead role in stream­ing mu­sic

The China Post - - WORLD BUSINESS - BY BRAN­DON BAI­LEY AND RYAN NAKASHIMA

Ap­ple’s iTunes helped change the way mu­sic-lovers bought their fa­vorite songs, re­plac­ing plas­tic discs with dig­i­tal down­loads. Now the maker of iPods and iPhones wants to carve out a lead­ing role in a revo­lu­tion well un­der­way, with a new, paid stream­ing-mu­sic ser­vice set to launch this sum­mer.

With mil­lions of lis­ten­ers al­ready tun­ing in to stream­ing out­lets like Pan­dora and Spo­tify, an­a­lysts and mu­sic-in­dus­try sources say Ap­ple has been gear­ing up to launch its own ser­vice, aimed at win­ning back some of those cus­tomers and nudg­ing long­time iTunes users into a new mode of lis­ten­ing.

Ap­ple is ex­pected to an­nounce the ser­vice at its an­nual con­fer­ence for soft­ware de­vel­op­ers, which kicks off Mon­day in San Fran­cisco. In a key­note ses­sion, CEO Tim Cook and other ex­ec­u­tives are also ex­pected to show off new fea­tures in Ap­ple’s op­er­at­ing soft­ware for iPhones, iPads and Macin­tosh com­put­ers, as well as tools for build­ing new apps for the Ap­ple Watch. An­a­lysts also ex­pect en­hance­ments to the mo­bile-pay­ment ser­vice known as Ap­ple Pay.

The world’s big­gest tech com­pany makes most of its money from sell­ing hand­held gad­gets, like the popular iPhone, and other com­puter hard­ware. But Ap­ple uses its an­nual World Wide De­vel­op­ers Con­fer­ence to high­light the soft­ware, on­line ser­vices and apps that make those de­vices in­dis­pens­able to con­sumers around the world.

Along with a new mu­sic ser­vice, in­dus­try ex­perts had been ex­pect­ing Ap­ple to an­nounce a new stream­ing-video pack­age and up­grades for its Ap­ple TV ser­vice. But that may be de­layed, ac­cord­ing to re­ports by the New York Times and the tech blog Re/code, which said Ap­ple is still ne­go­ti­at­ing with broad­cast­ers and isn’t ready to an­nounce the video ser­vice.

That puts the spot­light on Ap­ple’s mu­sic ini­tia­tive. An­a­lysts say the com­pany needs to build a ro­bust stream­ing busi­ness if it wants to main­tain its cen­tral role in the popular-mu­sic ecosys­tem. Most record­ings to­day are still sold through dig­i­tal stores like iTunes, which opened in 2003. But those sales have de­clined, while stream­ing ser­vices are rapidly gain­ing sub­scribers and rev­enue.

About 41 mil­lion peo­ple glob­ally now pay for stream­ing mu­sic from Spo­tify, Deezer and other out­lets, ac­cord­ing to the In­ter­na­tional Fed­er­a­tion of the Phono­graphic In­dus­try, which says sub­scrip­tion rev­enue grew 39 per­cent last year to US$1.6 bil­lion. Over­all down­load sales fell 8 per­cent to US$3.6 bil­lion.

Ap­ple Inc. bought the Beats head­phone maker and mu­sic stream­ing ser­vice for US$3 bil­lion last year, but pub­lish­ers’ data con­firmed by roy­alty track­ing com­pany Au­diam shows Beats Mu­sic had just 303,000 U.S. sub­scribers as of De­cem­ber, com­pared to 4.7 mil­lion in the U.S. for mar­ket leader Spo­tify.

While Ap­ple wouldn’t com­ment last week, a per­son familiar with its plans said Ap­ple has an am­bi­tious goal to sign up 100 mil­lion sub­scribers for a new stream­ing ser­vice that will cost US$10 a month and com­pete with other on- de­mand ser­vices such as Spo­tify and Rhap­sody. Beats users will be mi­grated over be­fore even­tu­ally closing down, and buy­ers of songs and al­bums on iTunes will also be pre­sented with the op­tion to pur­chase a sub­scrip­tion in­stead.

Along with a lengthy three­month free trial pe­riod for the paid ser­vice, the com­pany also plans to bol­ster its free of­fer­ing, iTunes Ra­dio, with a live on­line ra­dio sta­tion fea­tur­ing DJs like for­mer BBC host Zane Lowe and artists Pharell, Drake, Muse and David Guetta.

The per­son spoke on con­di­tion of anonymity be­cause ne­go­ti­a­tions be­tween the com­pany and record la­bels were pri­vate.

Aside from mu­sic, an­a­lysts ex­pect Ap­ple will tout im­prove­ments to other ser­vices like Ap­ple Pay and Siri, the voice-ac­ti­vated dig­i­tal as­sis­tant for iPhones and iPads. Ap­ple has also hinted it will re­lease pro­gram­ming tools for its new smart­watch.

Most apps avail­able for the Ap­ple Watch are ex­ten­sions of apps that run on the iPhone. In­de­pen­dent app-builders like Jor­dan Edel­son, CEO of Ap­pe­tizer Mo­bile, are hop­ing Ap­ple will re­lease the code to build apps that in­ter­act di­rectly with sen­sors and con­trols on the watch.

Edel­son also pre­dicted Ap­ple will in­tro­duce soft­ware that ties other prod­ucts more closely to­gether, such as apps that make the iPhone into a con­troller for tele­vi­sion sets and other ap­pli­ances.

That’s a smart strat­egy, said For­rester Re­search an­a­lyst Frank Gillett. “Once you start or­ga­niz­ing your life around Ap­ple prod­ucts, you’re less likely to ditch your iPhone and go over to An­droid,” he said, re­fer­ring to the com­pet­ing tech­nol­ogy from Ap­ple’s ri­val, Google.

AP

In this June 2, 2014 file photo, pedes­tri­ans cross the street in front of the Moscone Cen­ter, which is host­ing the Ap­ple World­wide De­vel­op­ers Con­fer­ence, in San Fran­cisco.

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