Contrary to earlier reports, Apple is not planning on undercutting Spotify with its new streaming music service. Instead, the iPhone maker reportedly plans on charging users $10 a month to stream unlimited music via a rebranded iTunes Radio-like service, the same price that Spotify charges its 15 million paying subscribers.
Citing multiple sources familiar with the plans, The Wall Street Journal reports that Apple is planning to unveil its brand new on-demand streaming music service at its Worldwide Developers Conference next week, a move that could potentially shake up the music industry yet again given Apple's universal brand recognition and massively loyal user base.
However, The Journal reports that Apple has yet to seal the deal with the industry's three biggest record labels, Universal Music Group, Sony Music Entertainment and Warner Music Group, and failure to lock in the contracts by next week could possibly delay the announcement while Apple rushes in to secure partnerships.
Additionally, unlike Spotify, which has 45 million non-paying subscribers listening to an ad-supported version, Apple will not offer a free version paid for by advertisers. Instead, it will offer only "a handful of songs" for free listening and will include human-hosted shows to augment the free version of its service. Apple has reportedly spoken with a number of music celebrities such as Drake, David Guetta and its very own Dr. Dre, whom Apple brought over during its acquisition of Beats Electronics last year, to host some of its shows.
Aside from the Apple brand name, it is still unclear how Apple plans to differentiate its new subscription service from the likes of Spotify, which currently owns a whopping 86 percent of the streaming music industry, and Pandora, whose custom radio stations has attracted 79 million users in the U.S., Australia and New Zealand.
As expected, Apple plans to launch its new service to a lot of fanfare, with an aggressive advertising campaign well on the way. The firm is also willing to trade off its music downloads business in exchange for getting its customers to switch over to its streaming service. For instance, customers who download a music album for $10 a month will be asked if the want to listen to streaming music for an entire month instead. Apple also plans on offering a free trial period where users can listen to certain free songs as allowed by the record labels.
Currently, Apple is the dominant player in the music downloads industry, where it owns 85 percent of the entire market share. But people are moving from downloading their own music to streaming it over the Internet, causing an 8 percent decline in the industry last year. Streaming, on the other hand, is the only music business that has seen a continuous growth, with revenue seeing a sharp 45 percent uptick to 1.6 billion last year.
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