Why Doesn’t Apple Start Its Own Streaming Service?
When it comes to digital media, renting has as many advantages as does purchased media. For example, if you rent music, books or movies, you don’t have to worry about a variable cost. You can consume as much as you can eat, for a fixed cost, that’s easier to budget than the variable cost of owning. You also don’t have to worry about your purchased music, books or movies not being supported in the future as products evolve, since you don’t own it anyways. There’s definitely a lot of wisdom behind the whole concept of subscription services.
On the other hand, when it comes to purchasing, the content is literally yours to do with as you please. You don’t depend on third-party services to consume your content, like for example a permanent data connection. Even if your cost is not fixed, you know your data plan won’t turn into a variable cost since you don’t need data to consume your music. Even though lots of services are migrating to the cloud, limited data plans and scarce support for fast data speeds still limit the cloud to become mainstream, so buying makes a lot of sense for now.
Where these two options differ is in a key factor that many haven’t considered yet, and that’s loyalty. See, if you purchase Apple media, like for example books or apps, these don’t work on other platforms. Whenever you have to upgrade your device in the future, your choice is narrowed-down dramatically depending on how much money you’ve invested in a platform. I may carry two smartphones with me at all times, but do you know why one of them is always an iPhone 4S? The sum of my investment is why.
So the question is: Why has Apple been so reluctant to launch a subscription service? Here are a couple of reasons why we think they haven’t:
1. They don’t believe in it
If you read the May 2012 iPad edition of Fast Company magazine, you heard the lost Steve Jobs interview tapes from April 2003 where he was approached about music subscription services. His answer was:
“Nobody wants to subscribe to music. They’ve bought it for 50 years. They bought 45s, they bought LPs, they bought 8-tracks, they bought cassettes, they bought CDs. Why now do they want to start renting their music? People like to buy it and they like to do what they damn well please with it when they buy it.
The rental model is a money-driven thing. Some finance person looked at AOL getting paid every month and said, ‘I’d sure like to get some of that recurring subscription revenue. Wouldn’t that be nice?’ It’s certainly not a user-driven thing. Nobody ever went out and asked users, ‘Would you like to keep paying us every month for music that you thought you already bought?’ -“
And while many success stories like Spotify teach us a different story, there’s no denying that Apple’s approach of selling music through iTunes is already far more successful. Movies are a different story if we consider Netflix or Hulu though, but then again, people have always been used to paying for cable to consume content they already know they don’t own.
The fact of the matter is, music subscription services are late. They should’ve become mainstream or bust back when unlimited data plans existed. Now that everything is limited, there’s no use in having 40 hours of music on the battery life of your iPhone, if that’s enough to drill a huge hole on your phone bill. If unlimited doesn’t return, the whole idea gets complicated. And if unlimited does return at an expensive rate, that will still be the case
3. Because paying is already successful
Why fix what’s not broken? To this day, there is no company that sells more music than iTunes, and I mean that both on and off line. It would be illogical for Apple to cannibalize an already successful business model that’s still not threatened by anyone.
4. Because it doesn’t drive loyalty
It took Apple some time to finally consider porting iTunes to Windows. They wanted the original iPod’s beauty and convenience to lure customers to the Mac, and that was kind of a tall order if we consider what a Mac cost back in the day. They didn’t want to expand to other platforms, but they had to in order to survive. That was sadly the last time we ever saw that happen. Apple wants customers in their ecosystem, and they’ve already figured out a way to keep customers glued to their iPhones through their App Store. The whole idea of being able to purchase your music easily on your device and have it download on all the rest of your devices through iTunes in the cloud has a lot of good reasons to have people within the Apple world.
iTunes Match is a rare animal when compared to other subscription services like Spotify, but in a way it isn’t. You can’t consume all you can eat, unless you get the music elsewhere and have iTunes Match pull it to your library, but it does allow you to stream music to your devices as of iOS 6. This is very handy if your storage is running tight.
Apple hasn’t released any numbers regarding how it’s selling, but it has proven to be convenient for many people. I was able to rescue many old CDs from the early 90s that didn’t sound as well as they do now, and have that music swapped for high quality versions on from the iTunes Store in just minutes. For people that prefer to own their content, you can’t really beat $25 a year.
The Bottom Line
What are your music listening habits? In my case, I like to stick to the music I like. I’m not a big fan of discovering new music unless it comes from artists I already like, but I do know of many of you who behave differently. Music subscriptions have the advantage of allowing you to enjoy new music without the need of bleeding cash for it, but buying has the advantage of only costing you whenever you want to spend on it.
Apple’s iOS 6 streaming concept through iTunes Match shows us an Apple that may be opening-up towards new business models. Whether it will happen or not is something I can’t answer. The great thing is that you don’t really need for Apple to adopt the concept to enjoy music rentals. Spotify works on iOS just as well as iTunes can sell you a song, so it’s not like if you’re currently limited. I would definitely be an unhappy customer if Apple blocked Spotify or Pandora on my device, but since they don’t, I guess it’s ok for them to stick to what works for them. Buy when you want from iTunes, stream and discover when you want from others.