Spotify Admits Defeat Already

Spotify’s head Daniel Ek notably tweeted “Uh ok,” after Apple announced its Apple Music service. Today, Reuters is reporting that Ek has already admitted defeat. He is quoted as saying:

“To me it is enough to be among the top three… But right now we have an advantage of being the number one in music.”

Geez, he shouldn’t give up this fast. Though you have to admit, Apple is the juggernaut coming in and shaking things up. I’m not convinced that Apple will “win” this market though, if winning means anything. It’s possible that Apple will get people to pay for streaming who never paid for it before, and that Spotify will keep many of their 20 million paid subscribers. In other words, Apple’s service could be what tips the balance toward streaming as a viable alternative for everyone.

However, it will be much harder to differentiate music streaming services in the future. It’s not a handful of exclusives that will make people switch from one streaming service to another. Once you’re locked into that service – when it’s got your listening history, your playlists, and your friends – it’s less likely that you’ll change. The difference won’t be one of price, as Apple has aligned their pricing with Spotify and others. It will be one of convenience, of user interface, of usability. And Spotify is not the leader there.

Interesting times for the music industry.

Clickbait Article Publishes Incorrect Figures about How Much Apple Music is Paying Record Labels

Digital Music News, known for its not-quite-precise reporting about the digital music industry, ran a nice clickbait article yesterday, Apple Is Paying Just 58% of Streaming Royalties Back to Indie ArtistsÂ…. This article was picked up later by a number of Apple-related and tech websites. But Digital Music News was wrong; and now they admit it, sort of.

It all begins with a contract they got a hold of. This contract stated that, per $10 account, Apple would be paying out $5.80 to record labels. But, as several commenters pointed out, this does not take into account publishing royalties, paid to composers and songwriters, which are paid separately from performance rights. These publishing royalties, which come to around 12%, added to that 58%, equal – oh, what a surprise!!! – 70%, the industry standard rate for payouts to musicians and composers combined.

Digital Music News did publish a correction, after the first paragraph of the article:

Digital music news 58

But didn’t change their clickbait headline. Sigh.

Apple Music: a Close Look at How it Works

Apple announced Apple Music yesterday. This new service combines a music streaming service with discovery features, curated playlists, and radio, and also includes a sort-of-social network for music. (Remember Ping?) Apple’s presentation of Apple Music was very confused and confusing, and was marred by uninspired presenters, suggesting that the company really hadn’t spent much time planning the presentation.

As of today, all we know about Apple Music is what’s on the surface. Here’s what Apple Music offers:

Music Streaming

Apple Music will be a music streaming service, like Spotify, Deezer, or even Tidal (without the lossless option that latter service offers). Presumably, Apple Music will stream at 256 kbps, but Apple has not said anything about quality. Apple claims that you can listen to “the tens of millions of tracks in the Apple Music library.” I note that they did not say “all the music available on the iTunes Store,” which suggests that labels may be allowed to opt out.

But Apple says:

Apple music1

This suggests that Apple Music will work as I suggested in this article. I suggested that Apple would integrate streaming tracks into your library, allowing you to make playlists with tracks you own and tracks you rent. This seems to fit with what Apple says on their website:

Wherever your music comes from — purchased in the iTunes Store, ripped from a rare import CD, or downloaded from your favorite music blog — everything you’ve collected lives in one place. And alongside it is the ever-expanding Apple Music library. It’s like having just about every song ever recorded at your fingertips.

And this:

As an Apple Music member you can add anything from the Apple Music library — a song, an album, or a video — to your collection. And that’s just the warm-up act. From there you can create the perfect playlist from anything you’ve added. You can save it for offline listening and take it on the road.

Apple Music will be available through iOS devices, Macs or PCs using iTunes, the Apple Watch, and even Android, with an app for that platform available in the fall. And Apple Music is clearly designed for those users who already have an iTunes library. If you’re a Spotify user, and only listen to music through that service, there’s little incentive to switch. But if you do have music in your iTunes library, then Apple Music, by allowing you to combine your existing library and streamed tracks, makes it much easier to use what you already own.

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