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Op Ed: Apple/Streaming/Subscription – Bob Lefsetz

Your files live on your handset.

That's what most people don't know about the Spotify iPhone app.  That if you pay the monthly fee, not only can you stream anything you want online on your desktop, there's automatic synching of approximately 2,000 tracks to your handheld.  So, it's just like owning them.

And, you can stream the rest of the catalog if you're in cell range. Rhapsody and MOG offer similar services.

But so far, no paid music subscription platform has gained significant traction. This is a head-scratcher.  Apple's not offering movies for free. Why should music be free?

It shouldn't be.

But it appears that the only company that's going to be able to make headway in the music streaming/subscription sphere is Apple.  That's right, great subscription streaming apps exist today, but almost no one wants them!

I keep getting e-mail from the Rdio PR person, do I want to talk to the

Do I want a comment!?

No, Rdio is irrelevant.  Some hype upon release and temporary free use, then dead in the water.

But when Steve Jobs graces the stage in Silicon Valley and announces that he's seen the future of music and it's subscription streaming, which believe me, he's gonna do, people are going to fall over themselves to sign up, it'll be like the Who in Cincinnati.  But instead of people dying, thank god, you'll get Net gridlock, you won't be able to get through to sign up.

If the servers don't crash outright, they're going to run at a snail's pace.

How did this happen?

You've got to go back ten years.

Actually, just a bit longer, to when Steve Jobs came back to Apple.  He's been building customer trust as well as the content providers have been destroying it.

As powerful as any band, Steve's now got a tribe of early adopters who will buy anything Apple offers, and will tell everybody who doesn't have it how great it is.  Come on, if you haven't been harangued by an Apple fan, you live in isolation in the Arctic.

But it gets better for Apple.  They've got a support network, not only online and on the telephone, but at the Genius Bar.  Yup, you can make an appointment to see an actual person, face to face!  And if you believe you've gotten ripped off, there's a Fortune 500 company standing behind
your product, not a one of a kind service that could go bankrupt at any minute, taking your money and music with it.

Furthermore, Apple's got credit card information.  It's just one click to buy the company's latest offering.

The only way to compete with Apple is to start off free.

I'm not passing judgment, I'm just stating a fact.

Imagine if a social network far superior to Facebook launched today.  Only you had to pay ten bucks a month to use it.  It would be a nonstarter.

Look at Twitter, which is free.  For all the fanatical users, there are tons of naysayers, claiming the service is a wank, a complete waste of time.

These same people forward any negative story about the microblogging service, they want to kill it.  Probably because they're overwhelmed and they just don't want to get up to speed, spend time on one more platform.

Yes, people are overwhelmed, that's why they stay with Apple.  Even if you're better than Apple, you're screwed.  Even if you're cheaper than Apple you're screwed.  Amazon can't make a significant dent in Apple's music retail market share.  Despite oftentimes blowing out product below cost.

Spotify has social networking features already. But Ping gets all the attention.

So, we can wait for an indeterminate point in the future, when Apple offers a streaming subscription and the rights holders bitch that their hands are tied by Steve Jobs, or the rights holders can authorize free services to compete, to get a leg up on Steve and Apple.

That's the only way Spotify can compete.  Spotify is superior in functionality to all its competitors, but the rights holders don't want to make music free.  I can understand that.  But do they want to play into the hands of Steve Jobs?

And, rights holders can always experiment.  Offering a short license to see if Spotify can convert free customers to paying ones.  After all, the public has lived through the loss of Napster and KaZaA and AudioGalaxy and…

As for a Google music service?

Google doesn't have the credit cards.  And the public doesn't trust the company as much as it does Apple.  And the Nexus One debacle proves that without a customer service infrastructure, you're screwed.

Then again, Spotify has no customer service infrastructure either, which is why a free launch is necessary, to build trust.

The only way you can compete with established Net players is by starting off free.

Theoretically, you can establish a whole new paradigm that charges.  Then again, the iTunes software was free, it was the Trojan Horse that allowed Apple to ultimately sell music.

So free is the best start.

If you want to start at all.