Reviewers have not been kind to Apple’s launch of Apple Music.
They see it as a confused mess, mushing together several different functions — streaming, radio and an artist promo platform — that might have been better broken out into separate apps. (In tech, the golden rule is that the best apps do one simple thing really well. This thing seems to be trying to do three things not well.)
But before you assume Apple Music is going to go the way of iTunes Ping, you should understand the history of vinyl.
Apple appears to be on the verge of resurrecting the vinyl era and there is every reason to believe the company will succeed. Such a model has succeeded twice before, after all.
The one thing people in the music business all agree on is their love of vinyl. They love how it sounded and how it presented their work inside huge picture sleeves.
They also love how it made money.
In the vinyl era, you had to pay to hear a piece of recorded music. Tape cassettes let you copy an album for free, but taping was so laborious that it didn’t really dent music sales. Nonetheless, the music business launched a legal and lobbying campaign against tapes, called “Keep Music Live.” (They didn’t ask consumers to be a part of this vinyl agreement, of course.)
This agreement that “vinyl is great” wasn’t a conspiracy … except for the period when it was an actual illegal conspiracy called “payola.” Record labels paid radio stations to promote and play their vinyl, and reaped extra sales as a result. The US Congress even held an inquiry into it.
Labels and musicians loved it. They got rich.
In the 1980s, the CD essentially replicated the vinyl experience. Both vinyl and CDs were difficult to copy. You had to pay to hear the music, and labels still had a very cosy relationship with radio stations that created hits. Unsurprisingly, everyone in music agreed that the CD model was the way to go. The payola conspiracy morphed into a non-criminal industry-wide agreement.
CD sales actually added sales on top of vinyl until just after the year 2000. (There is a good set of charts on this here.) The music industry was at a glorious peak. The “conspiracy,” in its watered-down format, totally worked.
Then in the late 1990s, the web showed up and music became fully digital and went online. It was easily copied, for free.
The web was an apocalypse for the music business:
Suddenly anyone, anywhere could copy and send music for free as much as they wanted. Napster, and online digital music, basically destroyed the global music business, halving its revenues in less than 10 years through 2009.
Record label execs and musicians alike still suffer from the post-traumatic stress disorder of seeing the business they loved torn apart (and the money they made from it vanish).
This apocalypse is EVERYTHING that informs Apple’s new Apple Music launch.
Note that red section in the chart above, of digital music sales.
That red bit is iTunes, basically. In the early 2000s, Apple persuaded all the record labels to agree to the same deal: Sell your music through iTunes at the same price, 99 cents per song.
Digital music sales are the only piece of the pie that is growing. And the only reason they are growing is because Apple’s iTunes downloads helped kill off Napster, Kazaa, Limewire and the rest of the free music piracy business. The record labels sued Napster out of existence. And iTunes made it easier to buy music rather than search for free music. While that red chunk is small compared to the vinyl years, the point is that it was growing.
iTunes essentially rescued the old vinyl/CD industry agreement.
What started as an actual conspiracy over how to promote and sell vinyl was now a completely legal agreement that everyone in the music industry signed up to, even though they were supposed to be competing against each other. (Some people do regard iTunes’ price structure as an actual conspiracy, but those people lost their case in court.)
But then this happened:
By 2013, 21% of music industry revenues were NOT coming from Apple’s iTunes downloads. They were coming from streaming services like Spotify and Pandora — a business that Apple had no part of. One record company, Warner, even reported that its streaming revenues exceeded its paid download revenue.
Worse, these services provided the streams for free in return for the users’ agreement to listen to ads between songs, a bit like the radio.
From the consumers’ position, it was like the return of Napster — free music!
And although music streaming provides some revenue to the labels, it doesn’t provide a lot. Worse, it was literally killing iTunes. Look at this chart of iTunes revenue over time broken out by format, from Asymco.
iTunes music sales are the green bit, which is clearly going nowhere or even getting smaller:
This is where vinyl history comes in.
When tech companies demonstrated that CDs were obviously going to be better than vinyl, record labels got on board because they knew consumers would still have to pay to listen. When Apple launched iTunes, record labels got on board for the same reason — consumers would have to pay to listen.
Now Apple — which apparently still doesn’t have all the label agreements it wants in place, according to Apple svp/internet software Eddy Cue — has a new product that requires listeners to pay, again. There is no free streaming tier with Apple Music. It starts at $US9.99 a month.
Unsurprisingly, record labels are mostly on board. Listeners have to pay. Streams are difficult to copy. Apple is going to get widespread agreement from artists that this is the way to go — no free streams.
It’s not an illegal conspiracy just because everyone agrees to do the same thing. (Although some states attorneys general are investigating whether an illegal agreement may have taken place.) But by amazing coincidence, just like in the days of vinyl and payola, you are going to find that everyone in the music business is totally on the same page again.
Apple is even offering artists leverage to force this to happen. One of the most interesting bits of Apple Music is Connect, the artists’ platform. Connect is a place inside Apple Music where artists can promote their songs and talk to their fans. It’s a lot like MySpace, in concept. (Before you start laughing, bear in mind that a lot of smaller artists really liked MySpace for this reason in its early years, and they still miss its presence today.)
A band can release a song for free in Connect before any other platform, or put it on sale in iTunes before anywhere else, or have it available to stream for the Apple Music fee before anywhere else. For a lot of bands, that will be a powerful incentive to be inside Apple Music and on Connect. It adds another way for bands to reach fans and let people discover their music.
Here is Eddy Cue in The Guardian:
“Our viewpoint was very simple: let the artist and label control it. They can put it up on Connect for free if they want to, or they can put it up behind the [subscription] paywall, or they can make it available on the iTunes Store for sale. They’re in control of their music and how they want to distribute it,” says Cue.
So now you have a situation where Apple is saying, “Hey music people! We rescued you from Napster with iTunes. Now let us rescue you from Spotify with Apple Music.”
It’s the same deal — everyone pays — but with bells on. Artists get a free MySpace to help them shift units.
So, yes, there is every reason to believe this is going to work. That mush of features inside Apple Music isn’t a mark of confusion or disorganisation.
It’s Apple’s very focused vinyl music strategy all over again.
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