Apple May Launch Music Subscription Service to Compete With Spotify

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In order to compete with Spotify, which has been blamed for taking away a large share of Apple’s customer base, the firm may launch a music subscription service. The report first appeared on Billboard, which also informed that Apple may create an iTunes app for Android-based devices to tap into a larger market share.

The firm has also reportedly engaged in talks with record labels to discuss their strategies regarding the on-demand streaming service.

The music sales of iTunes – which sells songs by the track or by the CD – have been declining sharply, largely because Spotify and other similar music subscription services allow subscribers to listen to unlimited streaming music for a flat monthly fee. Moreover, Spotify users can even download their favorite music on their phones and maintain a playlist, which will keep playing music as long as the subscription is maintained.

In figures, the fate of iTunes seems even worse. Apple’s iTunes sales in the US have suffered a 13 percent decline in downloads of albums and 11 percent decline in sales of individual tracks. This is compared to a 39 percent rise in U.S. subscription revenues of services such as Spotify.

At the international level, subscription revenues increased by 51 percent while digital music sales declined by 2.1 percent. Keeping the figures in mind, it would make sense for Apple to tap the music subscription services market and launch its own service to compete with Spotify.

However, one of the reasons Spotify has been so successful against iTunes is because it is almost completely cross-platform. The service can be used on its Apple’s iOS devices and Macs, Android devices, Sonos devices, Windows phone devices and personal computers, which means that regardless of what device a subscriber has or plans to buy, his or her Spotify service will work and be accessible. iTunes can only run on Apple devices.

If Apple wants to be successful with its plans to launch a music subscriptions services, it would have to ensure that it is compatible with all other devices, along with the usual Apple products. Moreover, it would then also be able to reach out to more fans and offer music at lower prices.

However, as music streaming gains higher popularity, Apple seems determined to consider all options to keep revenues flowing in. For even though late CEO of Apple, Steve Jobs, had not wanted “to make Android users happy” (Jobs had actually said this in a Walter Isaacon-penned biography in the early 2000’s), an iTunes’ app for android-based devices is likely to be on the cards for the company.

In September last year, Apple took its first major step into streaming with the launch of iTunes Radio, which allows users to listen to ad-supported radio stations, based on the artists and genre of music they prefer. The users can also buy any of the songs that are being played on iTunes Radio. The company further makes additional revenue with providing the users the option to remove advertisements from the radio with a $24.99 annual subscription. Unfortunately, the firm has still not been able tap the real potential of the music streaming sector.

Meanwhile, Apple continues to explore. With the possibility of an iTunes on android and the likelihood that the firm may launch music subscription service to compete with Spotify, the firm is at least moving in the right direction.

By Faryal Najeeb

Sources:

AFR
Digitalspy
uproxx

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