Apps, Mobile & SMS

Music Apps Become Pawns In Platform War

Tumblr_ltnipx3VHi1qdcv5gGuest post by Kyle Bylin of

Apple did not
debut a Pandora rival at the recent iPhone 5 unveiling. Sentiment among analysts about the possibility, however, did reveal something about how the ongoing
platform war will impact music apps.

Often we regard a “good” idea with great timing as having the potential to capture a market, and perhaps, even obtain for its owners a lucrative exit. What
we have learned recently is that a third and equally important element must align, too: distribution. The trouble is that in the platform war the
distributors of apps—Apple, Google, Amazon, and Facebook—are also developers of apps; they could love an idea enough to buy it (as Facebook did with
Instagram), or they could just develop their own.

The advent of the iPhone and apps provided Pandora with mobile distribution, but it depends on Apple for the service. If Apple were to launch an Internet
radio app, it could drastically damage Pandora. By simply installing the app on 400 million iOS devices—iPhone, iPad, and iPod Touch—Apple could “steal
Pandora's audience, and crush its mobile ad business in the process,” according to Jim Edwards at Business Insider. It’s still the early days for Internet radio, and if Apple wants, says John Brownlee of Cult of Mac, it could “become the world’s biggest streaming music service overnight.”

"Spotify and the like… they are still pawns

on a chessboard [Apple] invented."

The reality, however, is that such a move likely has larger ambitions. As Peter Kafka at All Things D suggests, an Apple-branded app could be enough to keep “an iPhone or
iPad user from jumping ship to rivals like Samsung, Google, or Amazon.” Certainly, Apple is playing some defense against Spotify and the like, but they are
still pawns on a chessboard it invented. Given that critics have sniffed at the iPhone 5 as better but not “insanely great,” it’s clear that Apple must
continue to develop and release exclusive features to keep users on board.

But as Glenn Peoples at Billboard points out Google and
Amazon “must see the same gap—it's that obvious.” He asserts that Google “would be wise to build an Internet radio service into its cloud-based Google
Music service.” Amazon could take the same approach, or as Peoples notes, double down on Songza, which it already backs.
Meanwhile, Facebook remains cozy with Spotify, which Mark Zuckerberg insists is “killing it right now.” In other words, as the
platform war between the four tech giants heats up, the pieces on the board will move.

“Over the next two years, Amazon, Apple, Facebook, and Google will increasingly collide in the markets for mobile phones and tablets, mobile apps, social
networking, and more,” technology columnist Farhad Manjoo writes at Fast Company. “This competition will be intense.” None of these companies really cares about the music business, given that their secret
plans—plans that extend far into the future—include swallowing the entire media business.

A music app to Apple is a feature, not a product, and barely a business. Internet radio will keep users loyal to Apple’s devices and likely drive iTunes
sales. Music serves as a loss leader and Pandora is just roadkill.

“Apple could buy 60 Pandoras,” quipped longtime Apple reporter Philip
Elmer-DeWitt in a headline at CNN. Cupertino could afford to. “But Pandora—or Spotify or iHeartRadio—is not the kind of acquisition Apple likes to
make,” he reasons. "There's no talent or patentable technology there that it doesn't already have.”

"the happy ending for Pandora many of us

had hoped for will likely never come."

If this all sounds disheartening, it should. We have all heard the story
of the hungry upstart that has nearly bled to death—likely dozens of times—as it sought (read fought) to deliver custom radio stations and take
down Clear Channel. The 12 maxed-out credit cards. The unpaid
but passionate staff. This tale of peril to mobile triumph to IPO is legendary now. But the happy ending for Pandora many of us had hoped for will likely
never come. It could burn out and fade away, or be bought out by an unforeseen suitor, but this Phoenix does not rise.

In the scheme of things, Apple is competing for audience with YouTube and radio. According to a recent survey by Nielsen, YouTube (64%) is the most popular way U.S. teenagers discover music, with radio (56%) and iTunes (53%) trailing close behind. Pandora, on the other hand, has
captured a smaller market share (35%).

Apple has dropped YouTube as a preloaded app on iOS
6, and if you think about it, the age of the “smart” car for most people consists of plugging their iPhone into their dashboard. That means that while it’s
still easier to tune into NPR than cue up an Internet stream, radio may soon be reduced to just another app on an Apple platform.

Pandora served as a bellwether that prepared people for Internet radio. But if Apple believes that it’s time for the primary mode of discovery to shift,
Pandora may become the coin Apple sets on the eyes of the dead in this war.

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  1. Wow. I love Pandora but Unfortunately it would makes all the sense in the world for Apple to do a radio network. Actually, they already have radio via their iRadio links in your iTunes library. Or all they have to do is cut the deals for full streams for content already in the store and charge a small annual fee as they did with iMatch. This will makes it very hard for start-ups as well as indie musicians. We’ll find away.

  2. A fascinating read. It never ceases to amaze me how such disparate businesses now find themselves closing in to compete more and more. All have their own different motivations for wanting to be in the same market surely most, ultimately would do better not to ‘be’ the media industry, but be (at least) a major channel for all media. So, surely the ‘swallowing up’ of the media market isn’t about killing off the likes of these creators and aggregators of content, but being the preferred channel for these players to access consumers?

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