Sun | Apr 23, 2017

Apple expected to go into music streaming

Published:Tuesday | June 9, 2015 | 6:00 AM

SAN FRANCISCO (AP)

Apple's iTunes helped change the way music lovers bought their favourite songs, replacing plastic discs with digital downloads. Now the maker of iPods and iPhones wants to carve out a leading role in a revolution well under way, with a new, paid streaming-music service set to launch this summer.

With millions of listeners already tuning in to streaming outlets like Pandora and Spotify, analysts and music-industry sources say Apple is gearing up to launch its own service, aimed at winning back some of those customers and nudging longtime iTunes users into a new mode of listening.

Apple announced changes at its annual conference for software developers, which kicked off yesterday in San Francisco. In a keynote session, CEO Tim Cook and other executives are also expected to show off new features in Apple's operating software for iPhones, iPads and Macintosh computers, as well as tools for building new apps for the Apple Watch. Analysts also expect enhancements to the mobile-payment service known as Apple Pay.

The world's biggest tech company makes most of its money from selling handheld gadgets, like the popular iPhone, and other computer hardware. However, Apple uses its annual World Wide Developers Conference to highlight the software, online services and apps that make those devices indispensable to consumers around the world.

Along with a new music service, industry experts had been expecting Apple to announce a new streaming-video package and upgrades for its Apple TV service. However that may be delayed, according to reports by the New York Times and the tech blog Re/code, which said Apple is still negotiating with broadcasters and isn't ready to announce the video service.

That puts the spotlight on Apple's music initiative. Analysts say the company needs to build a robust streaming business if it wants to maintain its central role in the popular-music ecosystem. Most recordings today are still sold through digital stores like iTunes, which opened in 2003. But those sales have declined, while streaming services are rapidly gaining subscribers and revenue.

"Streaming media is increasingly important to the computer-using experience, so it's important for Apple to have a role there," said Creative Strategies analyst Ben Bajarin.

About 41 million people globally now pay for streaming music from Spotify, Deezer and other outlets, according to the International Federation of the Phonographic Industry, which says subscription revenue grew 39 per cent last year to US$1.6 billion. Overall download sales fell eight per cent to US$3.6 billion.

Apple Inc. bought the Beats headphone maker and music streaming service for US$3 billion last year, but publishers' data confirmed by royalty tracking company Audiam shows Beats Music had just 303,000 US subscribers as of December, compared to 4.7 million in the US for market leader Spotify.

100-MILLION USER TARGET

While Apple wouldn't comment last week, a person familiar with its plans said Apple has an ambitious goal to sign up 100 million subscribers for a new streaming service that will cost US$10 a month and compete with other on-demand services such as Spotify and Rhapsody. Beats users will be migrated over before eventually closing down, and buyers of songs and albums on iTunes will also be presented with the option to purchase a subscription instead.

Along with a lengthy three-month free trial period for the paid service, the company also plans to bolster its free offering, iTunes Radio, with a live online radio station featuring DJs like former BBC host Zane Lowe and artists Pharell, Drake, Muse and David Guetta.

The person spoke on condition of anonymity because negotiations between the company and record labels were private.

"They are very late to the game on streaming," said analyst Van Baker at the Gartner research firm. However, he said Apple can still catch-up by making it easy for iPhone owners to use the new service. That's a huge pool of potential customers: Apple sold 61 million iPhones in the last quarter alone.

Edelson also predicted Apple will introduce software that ties other products more closely together, such as apps that make the iPhone into a controller for television sets and other appliances.