Coverage: Apple to start streaming music service

Apple will do just about anything to stay on top. And that includes adding a streaming music service in order to remain the go-to for consumers. The service will be announced next week and adds to the rivalry for consumers’ attention.

The Wall Street Journal story by Ethan Smith and Daisuke Wakabayashi had these details about the service:

With its dominant position in music threatened by a decline in download sales, Apple Inc. is preparing to launch a direct rival to Spotify AB and other popular services that let users stream songs instead of buy them.

The tech giant is betting that for the second time in as many decades it can persuade millions of people around the world to change how they listen to and pay for music. In 2003, the company’s iTunes Music Store made downloading individual songs the most common way for people to buy music—and made iTunes the biggest music retailer on the planet.

Music-industry executives see Apple’s launch, expected to be announced at its developers’ conference next week, as a watershed moment for streaming music that could move the technology from early adopters to the mainstream. While it is late to the game, Apple can aggressively push its hundreds of millions of iTunes customers—most with credit cards already registered with the company—to embrace a subscription model on the same devices where they listen to downloaded songs and albums.

Apple sells an estimated 80% to 85% of music downloads world-wide, according to people in the music industry, but it has a fraction of the streaming business—the only mode of music consumption that is on the upswing globally. Spotify accounts for 86% of the on-demand music-streaming market in the U.S., according to data shared with music publishers. Its share of the international market is believed to be similar.

Karissa Bell wrote for Mashable about the details of how the service will work, which isn’t breaking any new ground in terms of a model:

The premium tier of the service is said to cost $10 a month and offer unlimited on-demand access, much like competitors Spotify and Rdio. The free tier, however, will be more of an expansion of iTunes Radio’s existing service than a true Spotify competitor.

Rather than provide ad-supported access to on-demand streaming, the company plans to beef up iTunes Radio with new Pandora-like stations and a lineup of original programming. Apple is also reportedly in talks with stars like Q-Tip, Drake and Dr. Dre to host their own shows on the service.

This wouldn’t be the first time Apple has partnered with celebs on new music experiences — iTunes Radio rolled out celebrity-curated playlists from guest DJs like Katy Perry and Jared Leto in 2013.

The USA Today story by Jefferson Graham said Apple had an uphill battle to win over customers:

Apple had tried just two years ago to take on Pandora, the leader in free online radio, but didn’t gain much of an audience with its iTunes Radio.

The iTunes radio service, in fact, is nearly dead last among music streaming services, with just 5% of average weekly listening hours, compared to 32% for Pandora, according to industry tracker MusicWatch.

This time around, Apple is expected to use its advantage over rivals: prominent display on the home screen of the iPhone, where the Music app is one of the four main apps displayed on the bottom, next to Phone, Mail and Internet browser Safari.

“Nobody else is going to have that kind of real estate,” says Peter Csathy, CEO of Manatt Digital Media, a Los Angeles-based venture firm and consultancy. “That’s a significant advantage.

“If Apple wants to make a dent, it can by its sheer heft. It can simply throw gazillions of dollars at the problem/opportunity. There is nothing else like it,” he says.

The service, which is expected to be touted at Apple’s Worldwide Developer’s Conference Monday, will help consumers find new music by having radio stations programmed by DJs, similar to what’s being offered by iHeartRadio and Slacker Radio, say analysts, which is different from Pandora’s computerized approach. There will be a mix of free music and paid on-demand listening.

The New York Times story by Ben Sisario said that Apple wanted to try to differentiate its service from others, but was still in the negotiation phase:

“Apple is not too late, but they are certainly playing catch-up,” said Jan Dawson, an independent technology analyst for Jackdaw Research. “It’s a crowded market, and they will have to find ways to set themselves apart.”

Apple is said to still be haggling with record labels and music publishers over licensing terms, according to executives briefed on the talks. If those talks fail, Apple’s announcement could potentially be changed or even postponed, these executives said, though they added that Apple has often completed such deals at the last minute in the past.

Neither Apple nor the major record labels would comment.

For the music companies, the sticking points include how much Apple should pay with new features like far more extensive radio programming and a promotional tier in which artists can upload free content for their fans. The subscription streaming service will cost $10 a month, with free trial periods of perhaps two or three months, according to people briefed on the talks. A social networking component is also expected.

“They don’t want to launch just a Spotify competitor,” said one major-label executive, who spoke on condition of anonymity in order to discuss Apple candidly. “They want to launch an all-singing, all-dancing music experience.”

Apple’s service is expected to make downloads, streaming and radio all available in a redesigned version of Apple’s music app. (A version of it is also expected to be available on Google’s competing mobile platform, Android.)

Personally, I haven’t actually used iTunes in years since I started paying for Spotify. I don’t see anything that’s really a game changer to make me switch (and abandon all my carefully curated playlists). While I’m just one person, I’m sure that my attitude is one that will be shared by others. Apple has a lot to do to show music lovers that their service is truly different and worth the switch.