Music is an awkward subject for Apple. Music streaming represents one of the rare instances of Apple losing control of one of its product's life cycle (iTunes and the move from paid downloads to streaming). In some ways, this should not be considered too big of a deal since the music business is a fraction of its former self as the product has seemingly been commoditized. In reality, it is more complicated, as Apple's future product aspirations remain aligned with content, just not in a way that most people think. Music streaming and piracy will force Apple to reluctantly pivot its music strategy. While one can harp on the fact that Apple is incredibly late to the game, there are signs that Apple has already settled on a new music strategy: curation and discoverability.
Music was the lifeline that Apple was desperately searching for in the early 2000s. Positioning a breakthrough user interface as the primary selling point, iPod and iTunes revolutionized what it meant to buy and consume music. Today, music is different. I asked a simple question on Twitter earlier this week: Where do you get your music? The answer wasn't simple: iTunes, iTunes Radio, Beats, Spotify, Bandcamp, Google Play, Amazon, Pandora, CDs, Kickstarter/PledgeMusic, Deezer, Emusic, Spinrilla, YouTube, Bleep, Boomkat, Soundcloud, Rdio, eBay, blogs, Sirius XM.
At first glance, such a situation would seem pretty bleak for Apple as music consumption is no longer tied to using iTunes. In reality, there is still a way for Apple to regain a standing with music and it involves taking a page from the iPod/iTunes playbook: software. Differentiation in music still exists through curation and discoverability, although it remains obscure and clunky. Faint elements of social can be found throughout the entire process. Ask someone why they choose Soundcloud over Spotify or iTunes and you will get an answer. While it is debatable whether that answer is easy to replicate, the point is there is an answer. People still consider there to be some level of uniqueness in terms of how they discover music. Apple's goal is to position Beats as the answer to music's software problem. Mark Gurman over at 9to5Mac reported earlier this week that Apple's plans for Beats includes an interface redesign that sits on top of Beats existing technologies and content, while reintroducing some social elements into the service.
Apple can use software to develop a music platform where curation and discoverability guide the experience; something that was always an afterthought in iTunes. Apple's entry into paid streaming may be the start of a long journey leading to artist sustainability beyond music sales, which I discussed a few months ago in my longer-term view of the music industry. While a few companies have determined that the value is in producing and owning content (music, video), Apple's success with selling devices used to consume content changes the equation. Apple is able to create more value as a gatekeeper between an overwhelming amount of content and the end user. The company owning or distributing (cable/internet providers) the product is unable to fully embrace curation due to the inherent conflict with its business model. Add in the requirement of still needing hardware to enjoy content, and a long-term content/hardware strategy is born.
There are still some questions that need to be answered. If I'm positioning the software behind the content as the value proposition, how does Apple benefit if the end product is available on competing platforms? One way would be to embrace the idea that a service available to 100s of millions of additional users on Android can be used as a way to not only guarantee proper levels of music industry support, but also market a vibrant iOS ecosystem. I have a choice: use Beats music streaming on my Android phone, or enjoy Beats music streaming in my iOS ecosystem (iPhone, Apple Watch, Mac, Apple TV). Having iTunes on Windows helped sell iPods, with a delayed benefit to Mac sales. What if a Beats app on Android helps sell the music service itself (since critical mass is important for discoverability), with iOS devices receiving the delayed benefit?
Apple isn't taking an easy path when it comes to rethinking music as some of their actions have been somewhat forced upon them by outside factors. Nevertheless, Apple remains in an interesting position to utilize their software and hardware solutions in order to remove friction from the equation. Curation and discoverability represent Apple's best shot in music.