Although Apple's quarterly revenue streak was recently broken, a bump in Apple Music subscribers offered one bright spot in an otherwise grim report, suggesting Apple may finally be creating some perceived value in its music, even as Spotify loses ground.
Guest Post by George Howard on Forbes
As reported yesterday, for the first time in 13 years, Apple broke their streak of quarterly revenue growth. The revenue decline is being attributed to slowing iPhone sales and overall macro economic trends (i.e. China). In an otherwise gloomy report, there was a surprising bright spot: Apple Music subscriptions have surpassed the 13 million mark, up from the 11 million announced two months ago.
In thinking through how to explain this accelerating rise, it’s relevant to remember that the Apple Music launch was far from perfect. In this space, for instance, I wrote an article entitled, “Apple Music Betrays Apple’s Brilliance By Ignoring The Harry Potter Theory Of Marketing,” in which I expressed my disappointment that Apple – a company that is able to create perceived value around products better than any other firm – elected not to attempt to do so with respect to music:
If any company is capable of creating perceived value by de-emphasizing features, and highly-emphasizing the way in which a product makes the user feel better about themselves for having used the product, it’s Apple.
It’s too bad for Apple, for music, and for musicians that they don’t appear to be applying the same ingenuity to music as they do for their other products; I’d love to see what they would come up with if they did.
Ms. Swift has every right to be frustrated by [Apple's stance on free trials], as she has created massive perceived value in her music; enabling her to avoid the plights of commoditization that have plagued other artists. Apple has generated enormous profits by avoiding the perils of commoditization via innovative product design and marketing. In this manner, they’ve convinced people to pay for something that they could get at a cheaper price or “free.”
Streaming services have not been able to do this. Most customers cannot tell the difference between the various streaming services, and therefore dominantly make their choice based on which is cheapest/what they’re already using.
There have been a number of theories to explain how this differentiation is taking place, but they seem to coalesce around recommendations. This is particularly surprising in light of the fact that the “killer app” that was the apparent differentiator was the – to my ears – unlistenable Beats1 “radio” product (while I increasingly hear people talk about Apple Music’s recommendations, I have heard zero mention of Beats1 either in the press or amongst my large number of music-loving acquaintances/students in ages).
In February, Jim Dalrymple wrote of this suprisingly improved curation in The Loop:
I’ve been impressed and surprised by how much new music I’ve found. There’s definitely been some changes to the way Apple is curating the stations because the song choices are different—and much better—than when the service started.
Mr. Dalrymple’s experiences mirror my own. Over the past months, I increasingly found myself checking the “For You” section of Apple Music and being entertained, surprised and occasionally delighted, while having precisely the opposite experience with Spotify. I eventually grew so fatigued by the convoluted Spotify UI and non-value adding recommendations that I cancelled my paid subscription to Spotify and went all in with Apple Music.
In talking to others about my decision – dominantly, my students – I found that I was not alone in becoming frustrated by Spotify and growing enamored of Apple Music.
One of my students summed it up: “Spotify is becoming like MySpace, while Apple Music is more like Facebook
In further parsing this statement, the analogy – however unscientifically derived – has some relevance.
Facebook was, in part, able to eclipse MySpace by offering a more controlled, and thus aesthetically pleasing and functional UI. Recall, for instance, the ways in which MySpace allowed users to hack/”pimp” their pages, and how this decision resulted in both an un-navigable mess and slow load times. Facebook, on the other hand, severely limited personalization and instead focused on providing relevant content.
Apple Music’s UI – and particularly the “For You” section – is simple and straightforward in its layout and function. Further, it is updated with enough regularity that checking in a few times a day frequently results in the same slight dopamine hit of pleasure that – for many – causes them to recurrently check their Facebook page.
There are likely many other reasons why Apple Music’s subscriber base is growing, and never forget that Apple Music lacks the economic imperatives that Spotify and others have. But Apple Music’s subscriber growth, particularly when buttressed against Spotify’s recent cash raise – under terms described as “ugly, exploitative” - shows that perhaps Apple Music may well be on a path to provide real value to customers (and, I sincerely hope, to artists), and avoid the plight of commoditization and the fate of MySpace.