Op-Ed: Apple Streaming – By Bob Lefsetz

If Apple were all-powerful, iTunes Radio would have killed Pandora.

But it did not.

You think the way everybody's speculating next week Apple is gonna announce that Jimmy Iovine was cured from cancer and Steve Jobs was brought back from the dead. Most people don't even think about on demand streaming services, YouTube serves them well, if they listen to music at all! As for all the cries about the decimation of the music business… How bad can it be when Doug Morris re-ups at Sony for $20 mil and Taylor Swift sells out stadia and grosses triple digit millions! Does Pandora pay lousy publishing rates, do labels take the lion's share of streaming revenue, is the middle class of artists challenged in the new music era…OF COURSE! But the public cares not a whit, just ask Jay Z, whose Tidal is desperately trying to merge with another service before it loses so much cash Jay shuts it down.

Let's get some clarification here, there's streaming radio and streaming on demand.

We'll start with radio. It's called Pandora. Because you don't get to pick and choose what you want to hear, the rightsholders get less. But how satisfying an experience is the listening? If you like Pandora, you know nothing about music or you're not really listening. The genome project works not a whit, the recommendations suck, but it's free and it's good as background music.

Background music… That's how the majority utilize Pandora. Which generates some revenue for the financially-challenged company and some royalties too, but doesn't break artists. People have to be foreground listening in order for them to know who it is they're hearing and want to hear more. To believe that streaming radio is gonna save the music business is to believe the last fifteen years didn't happen. We live in an on demand culture. That's what's decimating television. People want to watch what they want when they want and they don't want the commercials. Come on, no one wants to wait for anything anymore! But they're gonna sit back and listen to automated radio? No, it's not the future. It's just that Tim Westergren did a great job of selling his company, it's got mindshare, and no one's filled the vacuum since, most people have no idea how Spotify even works. So, can Apple put a dent in Pandora? NOT IN AMERICA! We've already learned that! But outside the U.S. Apple can win with iTunes Radio, because it will land first. Whoop-de-do! Apple can lose money just like Pandora and not break acts all the while, who cares!

But then we get to on demand music streaming, i.e. Spotify and the new Apple service.

And then we deal with free.

I want to point you to this article, wherein it talks about closing Spotify's free window in Spain. REVENUES WENT DOWN AND TOOK A LONG TIME TO RECOVER!

"Clamp Down On Free Spotify? Now Is Not The Time For Knee-Jerk Decisions": http://bit.ly/1J7Sn1c

Never argue with the data. The data tells us free generates paid. May be counterintuitive, but don't expect anybody in the music business to understand science in a business built on intimidation and falsehood.

Also, as stated above, the public has no idea how Spotify even works! That you can synch playlists so that music sits on your hand-set like you own it and there are no bandwidth costs. That's right, Spotify's been here for years and people still don't know much about it!

As for Spotify free mobile… Ever try it? It sucks! You can't hear what you want when you want, which is why conversion to pay is so high when you give it away free on the hand-set. But nobody strumming a guitar or working at a label has ever used Spotify mobile free so they don't get it.

And the truth is YouTube is completely free!

But if you got rid of YouTube and…

Do we really want to go back to piracy? Most people don't want to pay for music. Not now anyway. Try to make them and they'll either tune out or steal. Which is so easy it ruined the recording business. You want to go back to that era?

No, the only hope is to wait for a completely mobile world and sell convenience at a fair price. That works. Just like Spotify and YouTube killed piracy…

But where does this leave Apple?

With nothing new to offer that's gonna make any difference.

Yes, Apple's got everybody's credit card. And if they give their new on demand streaming service away for free for three months people will sign up in droves. And then they'll cancel.

As for star deejays on iTunes Radio? After a week, who cares? If they did, everybody would be paying for Sirius XM, which features this regularly. But they don't, because they're cheap, even though Sirius XM is a business.

Right now on demand streaming music is a business. But it's trying to gain more subscribers. Meanwhile, everybody involved is greedy and unwilling to wait for people to understand streaming, never mind pay for it.

Apple will help getting the message out.

But why do you think it will win? Jimmy Iovine couldn't make Beats' streaming music service win!

So, welcome to the club Apple. Thanks for shining light on the sphere. But just because you've got a good brand and a history in music that does not mean you'll win in the future. Today the story evaporates quickly and then you have to do the hard work of adoption. And it turns out the public has no loyalty. It abandoned MySpace for Facebook… The story is advertising and promotion don't win online, it's all word of mouth for excellent products. Instagram and Snapchat were not sold by hype. Why does everybody believe that a big press story will put Apple streaming over the top?

It won't.

P.S. Remember when all-powerful Microsoft was gonna kill AOL with MSN? Didn't happen.

P.P.S. If starpower were everything, Tidal would be a juggernaut.

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