Just when 300 million people world-wide thought they found easy access to free music through the Pandora or Spotify, Apple’s Eddy Cue announced iTunes Radio. Although it’s a bold statement by Apple to challenge the dozen similar “music streaming” services, what’s more interesting is how Apple plans to make money from this “iRadio”.
Because users don’t buy the songs, there is no guarantee of profit, as can be evidenced by Spotify’s constant ads, attempting to upgrade users to Spotify Premium. In fact, what many users don’t know is that this music streaming company even has a 10-hour per month cap to regulate the amount of music one can listen to. On the other yacht, Pandora is exclusively only for the United States, and way down the dock, Google Play is for subscribers only. Although these companies pay no more than 1 cent per song listened to, 25 million users means Spotify needs to give up two billion dollars per month. Even Steve Jobs himself professed indifference to music streaming back in 2007 when he simply stated, “customers don’t seem to be interested in it”.
However, 2007 was five years ago and much has changed, while much also has not. iTunes is ten years old and is the largest music retailer in the world. With over 500,000 new users registering every day, Apple would be dumb not to take their customer base to conquer new fields. The music business needed iTunes when it needed to go digital, but it’s now time Apple actually wield the power it has been gaining for the past decade. Perhaps that is why it’s called iTunes Radio instead of iRadio. Customers will first be nonchalantly pushed into the iTunes community, which already has over 50 million users to support it. The “iRadio” will most likely be ad-supported and as long as users upgrade, Apple can be making some thick gravy. Also, people might even buy the songs directly from iTunes after streaming them (probably a one-click transaction).
Of course, there are many nuances as to how Apple will approach the music streaming industry. Will there be a social element as seen in Spotify? Exactly how much of the iTunes platform will iTunes Radio take advantage of? The questions are endless, not to mention scalability. But nonetheless, it will only need deals in a few countries for iTunes Radio to be the biggest music streaming service in the world. Stay posted until it officially launches in Autumn.