Apple Music Is More Than Just A Spotify Killer, It Could End Music Labels Too
The music industry confuses me. I love music as much as anyone, but it baffles me how this industry is still clueless after everything that has happened in the last 15 years.
I grew up with services like Napster, and I've seen labels turn into scared, litigious shells that have lost sight of what their goal is. Apple, on the other hand, is focused and intelligent. It spent billions on Beats, not for the overpriced and under-performing headphones, but for its two owners and the streaming music service.
The problem with the music industry has always been its reluctance to embrace change. When the internet took off and service like Napster arrived on university campuses across the world these firms had a choice. They could either work out what it was that people liked about music piracy, and provide some of that through legitimate means. Or, they could litigate and cower in fear as their golden goose started to show signs of infertility. They chose to sue, rather than develop their own system of selling music. It fell to companies like Apple to actually develop an ecosystem where music was sold in a format similar in design to how a less legal service worked.
As a business, making money can be hard. I run a business, so I know what might lie ahead. Work might dry up, budgets might get slashed and I may have to stop doing this and re-tool my company into something else entirely. That, of course, would be traumatic for me, but as the person in charge of my business, if I don't do due diligence and understand the market, who do I have to blame if that happens? I might feel cross about those who write for lower rates, or sometimes no rate, but these are market forces that are far bigger than any one company.
Tim Cook, chief executive officer of Apple Inc., exits the stage during the Apple World Wide Developers Conference (WWDC) in San Francisco, California, U.S., on Monday, June 8, 2015. Apple Inc. kicked off its annual developers conference in San Francisco, where the company will unveil a revamped streaming-music service, improvements to its mobile software and tools to speed up smartwatch applications. Photographer: David Paul Morris/Bloomberg
The record industry wanted to blame Napster and Limewire and Kazza and Audiogalaxy. Now it wants to blame Torrents and Kim Dotcom and Dropbox. At no point has the industry looked inward and said "guys, we might need to do some changing here".
The thing is, the music industry always had something of a point when it came to people sharing music and not paying to download tracks. But the biggest threat to the industry isn't people stealing music, it's their being rendered irrelevant by a company like Apple.
Let me explain how things could go wrong for the industry…
Apple starts as a streaming music service shortly, and its three-month giveaway is a genius move. Everyone will sign up. You might be on Spotify now, or Google Play Music, but you're still going to try Apple music for three months. That's a massive trial, and you can keep your existing subscription going all the while.
After three months a lot of people will realise that Apple gives them everything they need, or pretty much everything, so they move to its service exclusively. Over the next year or so Apple becomes a global leader in streaming music.
As a result unsigned acts flock to it, get their first tracks on the service – as with podcasts – and give out links across their social media. Soon Apple can tell who is hot from listens, likes and how things do on Twitter. The sheer amount of data generated by music subscription services is staggering. If Apple goes down this route, those acts will become a bit like app developers, they will get rich. Some will through music sales while some will find a streaming audience. Some might use their Etsy store to sell unique merchandise and rake in profit that way.
Performer Drake speaks during the Apple World Wide Developers Conference (WWDC) in San Francisco, California, U.S., on Monday, June 8, 2015. Apple Inc. kicked off its annual developers conference in San Francisco, where the company will unveil a revamped streaming-music service, improvements to its mobile software and tools to speed up smartwatch applications. Photographer: David Paul Morris/Bloomberg
Apple is now the label. The CD is already pretty much already dead, especially with young people. All that matters now is that your music is on Apple, and not having a label means that you aren't paying someone a huge cut to overcharge you for studio time. Artists won't be in massive debt to a label anymore. Some of them might choose to use a studio, perhaps paying for it out of their own pocket, but subsequent profits are theirs to keep – after Apple takes 30%, of course.
Eventually Apple is putting on concerts with its acts. It already does this with the iTunes festival, and there's no reason Apple couldn't be in the business of actually moving musicians around the world and putting them on stage. Hell, with Apple's money it could buy its own venues and pack them out every night with a different artist.
What's more, if you do well on Apple Music through streams the company might say. Well, what about we sell you a cheap Macbook, suite of music production software and other things that will help you set yourself up with a home studio. Of course there is a lot of extra things that make music nice to listen to. Post-production is a big part of music production, and some artists might want to go down this route too. At the moment, this is the sort of thing the label does with you, but you might argue it's part of why commercially-produced music has lost the edge over what was produced in years gone by.
Don't believe me? Well take a look at YouTube. Look at the stars of that platform with millions of subscribers. They are bringing in money through advertising to support themselves and in many cases a team of people to help them. A lot of these massively popular channels wouldn't have a hope on broadcast TV. What's more, the production values of some content are approaching what we see on TV too, and this will only get better as equipment continues to fall in price.
Take a look at gaming video supremo boogie2988. Boogie is enormously popular, but you don't see people like him on TV because he's overweight, has health problems and makes videos about computer games. But his audience is massive at 2.5million subscribers. He makes videos that are funny, interesting and touching. For this he's had hundreds of millions of views, and earns a living doing it (possibly a six-figure salary).
Meanwhile broadcast TV is failing. People don't want to have their viewing scheduled. Netflix proves that, and guess what, Netflix has become a producer now, funding and profiting from its own shows.
In 10 years time the record industry as we know it simply won't exist any more. If it does, it will be because it does an about-face, takes much smaller margins and offers useful services to its artists. Those who sit at the head of the big labels now will look back on the Napster days fondly and say "hey, we still got to drive around in expensive cars and eat in the best restaurants back then. That wasn't so bad".
As always, your comments are most welcome below.
Follow me on Twitter @IanMorris78 or Google+ and read all of my Forbes articles on my profile page.
Posted by: Kris Murray <krismurray@gmail.com>
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