Apple Moves Big in Music Industry

Apple Moves Big in Music Industry

Apple is looking to expand its business model by partnering with song writers. Rolling Stone writes about this strategic change in its article here. This move will 1) continue the disruption in the music market, 2) build Apple’s dominance in the streaming space and 3) lead to increased conflicts with non-affiliated talent (writers and performers).

 

The music industry has faced intense disruptive forces since the beginning of the internet. Ever since Napster converted physical music into digital and/or electronic movement, the music industry has shifted and changed to ensure record companies can make money. Just over a decade ago, the streaming services completely altered the playing field yet again. Now, streaming platforms such as Tidal and Spotify dominate.

 

Spotify, however, is not Tidal because Tidal has a direct link to talent and their labels. Jay-Z, for instance, owns Tidal. Now, with Apple coming into the game and coordinating with artist producers and music writers, there will be a new bully in the cage. It is vertical integration at its best.

 

Additionally, and this is why Apple will build on its dominance. According to the Rolling Stone article, Apple has 50 million subscribers. Spotify has 75 million. If Apple partners with writers and then cuts deals that provide Apple with exclusive content (much like Tidal did with Beyonce and Kanye West), consumers will necessarily move to that platform over all others, increasing Apple’s market share.

 

At the beginning of Apple’s streaming platform, Taylor Swift (at that time the biggest musical artist on the planet), argued over payments for streams. Swift won the fight, but not for any other reason than her huge platform and position within the industry. Will new writers and producers have that contractual leverage? Absolutely not. And that is where the new music and industry pushing force comes from, new artists with new and unique sounds.

 

So, overall, Apple’s move is shrewd. The industry is changing. Apple’s move is a consolidation play to lock up sources for new and exciting content. It is as if record labels started buying up radio stations around the country. Smart and scary!

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