Apple To Launch A Spotify-Like Service this year?

EbookReader · Apr 15, 2012

A few weeks ago, there were a rumor going around that Apple would launch a Spotify-like service. It turned out to be false alarm. But it's just a matter of WHEN not IF when Apple launch it (iStream perhap?).

http://www.sfgate.com/cgi-bin/article.cgi?f=/g/a/2012/03/19/businessinsiderthe-big-rumor-at-sxs.DTL

At the SXSW Music show this year, people are buzzing that Apple is getting close to launching a subscription music service to take on Spotify.

http://www.digitalmusicnews.com/permalink/2012/120315latest2

And of all the rumors floating around, this has to be the juiciest: executives keep pointing to a possible on-demand streaming service ahead from Apple, including a tight tie-in with iCloud and iMatch. That would present a huge problem to players like Rhapsody and Spotify, though Apple is playing it characteristically mum. "Apple doesn't like to lose in any category, they like to dominate," one executive noted.

Click to expand...

why is it likely?

Spotify success: It grew from 1 million to 3 million paid subscribers in a space of ~10 months (March 2011 to Jan 2012). It is expected/projected to make $889 million in revenue in 2012. (2011 revenue was $249.1 million).

January, 2010:------------ 250,000 paid subscribers
March 17, 2010:----------- 320,000
July 20, 2010: ---------------- 500,000
December 8, 2010: ------ 750,000
March 8, 2011:--------------- 1,000,000
July 14, 2011: -----------------1,600,000
Sept 21, 2011: ---------------- 2,000,000
Nov 23, 2011: ------------------2,500,000
Jan 26, 2012: -------------------3,000,000

http://www.reuters.com/article/2012/04/13/spotify-revenues-idUSL6E8FD0FE20120413

(Reuters) - Digital music streaming service Spotify may see revenues top 6 billion Swedish crowns ($889 million) this year as it pushes ahead with its rapid expansion on both sides of the Atlantic, founder Daniel Ek said in a newspaper interview on Friday.

Click to expand...

Revenues, 2011: $249.1 million
Revenues, 2012 (projected): $889 million USD

That's A LOT of growth right there.

In addition,

Spotify already overtook Itunes in Sweden (84% to 16%, (Norway too if I remember correctly) and Spain.

It is on track to overtake Itunes in France within 18 months.

All the more reasons why it's a safe bet that Apple is working on a Spotify-Like Service.

What do you think of the name iStream?

All of Spotify's $10 premium subscription memberships is done through smartphones. The iphone is Apple's gateway into the music subscription business, especially if the Big Carriers like Verizon, ATT, Sprint bundle the Apple music subscription service.

That's why I put this topic in the iPhone Forum. It's the most appropriate I think.

gdjsnyder · Apr 15, 2012

While I think it would be a good move on Apple's part to do this, there have been countless rumors about them launching a Hulu+ competitor, as well as a Netflix competitor. Neither has happened, so while it may happen, I don't put too much stock into rumors like these.

EbookReader · Apr 15, 2012

gdjsnyder said:
While I think it would be a good move on Apple's part to do this, there have been countless rumors about them launching a Hulu+ competitor, as well as a Netflix competitor. Neither has happened, so while it may happen, I don't put too much stock into rumors like these.

But Itunes is the leader in music. That's the different. (Itunes wasn't #1 in the Netflix/Hulu+ for tv shows/movies).

Subscription music has a very good chance of overtaking Itunes within a few years at the current growth rate.

swingerofbirch · Apr 15, 2012

I like Spotify a lot, mainly because you can't lose your music. If I had something like Spotify back when I first started collecting music (back in middle school), I'd have an amazing library now. As it is, I've had so many different computers since then, and I'd like to think all of my music is somewhere (scattered across tens of hard drives), but it's a pain to find and amalgamate it all. It's not that I want those actual filesI'd like the playlistsa record of which music I enjoyed throughout the years. With Spotify, if a computer breaks down, you just install Spotify, sign in, and all your music is there.

I know Apple is making inroads with allowing you to redownload your music, but Spotify has other advantages, in terms of allowing easy music discovery without having to buy something to see if you'll like it, and sharing playlists. I think it's a pretty good model because you don't lose anything even if you decide not to pay, you just have to listen to ads.

I only use iTunes for movies and podcasts now, not music. In fact sometimes when I go into iTunes I forget you can't double-click on a playlist to start playing music because I've become so used to the Spotify way of doing things. I use Spotify every day, which I used to be able to say of iTunes.

jeffe · Apr 15, 2012

I've been using subscription music for years starting with Yahoo Music when it still existed. Its starting to become mainstream which is great, however, the funny thing is music prices are starting to drop real quick with the new cloud music stores.

For the first time in a long time, I'm having a hard time not purchasing albums as they go on sale for 2.99, 3.99 or 5.00...with songs as low as 20 cents. Pretty soon, I imagine my music collection will be equal to what I'm using through the subscription services...and at that point, I may just cancel my subscription and keep buying one or two albums each month to grow a collection I actually own.

In the long run - I think its the right move b/c these services could quickly start raising rates as they become more popular. IIRC, spotify has yet to make a profit despite it's growth.

EbookReader · Apr 16, 2012

jeffe said:
I've been using subscription music for years starting with Yahoo Music when it still existed. Its starting to become mainstream which is great, however, the funny thing is music prices are starting to drop real quick with the new cloud music stores.

For the first time in a long time, I'm having a hard time not purchasing albums as they go on sale for 2.99, 3.99 or 5.00...with songs as low as 20 cents. Pretty soon, I imagine my music collection will be equal to what I'm using through the subscription services...and at that point, I may just cancel my subscription and keep buying one or two albums each month to grow a collection I actually own.

In the long run - I think its the right move b/c these services could quickly start raising rates as they become more popular. IIRC, spotify has yet to make a profit despite it's growth.

Wow. What stores sell "popular" albums at $2.99/$2.99 or $4.99?

I would love to get in on that...

jeffe · Apr 16, 2012

EbookReader said:
Wow. What stores sell "popular" albums at $2.99/$2.99 or $4.99?

I would love to get in on that...

Google play is currently having a one day $2.99 sale.

EbookReader · Apr 17, 2012

jeffe said:
Google play is currently having a one day $2.99 sale.

So you have to wait and maybe get lucky that the album of the day at $2.99 is one you like?

I'll stick with Spotify.

EbookReader · Apr 17, 2012

http://techcrunch.com/2012/04/17/facebook-listen-button/
New Listen Button On Facebook Musician Pages Instantly Plays Their Songs

And for most people, it will open Spotify when you click "LISTEN"

The longer Itunes/Apple wait to launch iStream, the more Spotify will be entrenched.

dontwalkhand · Apr 17, 2012

Yay it may happen, but like A LOT of the other unannounced Apple services we won't see it for quite a long time...probably in 2020-2025

EbookReader · Apr 18, 2012

dontwalkhand said:
Yay it may happen, but like A LOT of the other unannounced Apple services we won't see it for quite a long time...probably in 2020-2025

by 2020-2025, subscription music will have left legal download music in the dust.

It is already happening. By then, it will be way to late.

Sweden: Spotify 84% ---Itunes 16%
Spain: subscription is already more than 50% (legal downloads less than 50%)
France: subscription music is poised to overtake legal downloads in 18 months

TwoBytes · Apr 18, 2012

I would love apple to do this and subscribe instantly.

Pheelyx · Apr 18, 2012

I love my sub to Spotify. But I would subscribe to an Apple version in a heartbeat. But I suspect that Apple will not be allowed to offer subscription music until iTunes purchases drop substantially. The music labels won't allow it. They always let all the other companies do amazing things with music or movies but keep Apple locked into the same old way of doing things. Once subscription music overtakes individual purchases in the US, we might see this change.

EbookReader · Apr 19, 2012

Pheelyx said:
I love my sub to Spotify. But I would subscribe to an Apple version in a heartbeat. But I suspect that Apple will not be allowed to offer subscription music until iTunes purchases drop substantially. The music labels won't allow it. They always let all the other companies do amazing things with music or movies but keep Apple locked into the same old way of doing things. Once subscription music overtakes individual purchases in the US, we might see this change.

got a source for this?

All the music executives are excited about the potential of subscription music. It offers them much better revenue.

$10 a month = $120 a year from each paid subscriber.

They would love to see Apple join the fray.

EbookReader · May 18, 2012

Spotify is valued at $4 billion

http://dealbook.nytimes.com/2012/05...s-in-a-deal-that-would-value-it-at-4-billion/

Spotify is in the process of raising a new round of financing that would value the popular online music service at up to $4 billion, according to people with knowledge of the matter, in the latest eye-popping Internet company valuation.

Spotify so far is on track to raise about $220 million. Goldman Sachs is to lead the round with about $100 million, or about half of the round, two of these people added. The people asked for anonymity because they said they would lose their jobs if their identities were known. The company, which is still in discussions with several major venture capital firms, may change the size of the financing round, depending on demand.

I wonder what the value of Apple's iStream would be when it debuts...especially with Itunes having over 200 million customers.

Potential names:

iStream (my favorite)
itunes Unlimited
iMusic

The sign-up in the first month would be massive. Will work with Iphone, Android, Ipod Touch, Ipad etc...

anti-microsoft · May 18, 2012

I don't think Apple necessarily needs to offer a subscription model for iTunes, I think what they need to do is to embrace social networking. They need to make it easier for people to share links to songs, what they're currently listening to, integrate Genius in a social scene (friend recommendations, etc.)...

iTunes could potentially become irrelevant with the rise of subscription services if it push itself to stay relevant. People use iTunes because of it's tie with iPods and iPhones, I think that's one of the reasons the majority of people use it. iTunes is a recognised and strong brand and household name. As I said, it needs to keep up with the "innovation" happening in the media app business.

EbookReader · May 29, 2012

As for royalties

http://spotifyroyalties.blogspot.com/

$0.00450 per stream ($3,376 for 750,000 total streams)
$0.00579 per stream ($0.65412 for 113 total streams - August/Sept 2011)
$0.00870 per stream ($0.3219 for 37 total streams - Sept 2011)
$0.00726 per stream ($2.5549 for 352 total streams - July 2011)

Assume $0.0055 payment per stream.

$1.29 Itunes download x 70% = 164 Spotify streams x $0.0055
$0.99 Itunes download x 70% = 126 Spotify streams x $0.0055

adztaylor · May 30, 2012

I love Spotify and I'm a premium member. But if Apple came out with their own version I would jump ship instantly.

matttye · May 30, 2012

It's clearly a brilliant idea, but Spotify appeals to so many because of its' value. £10 for unlimited music on up to five devices is incredibly good value. Apple probably won't be able to sell their service for a much higher price. Spotify already integrates well with ios devices so Apple can't use that to their advantage either.

Even if Apple provided higher quality music, most people wouldn't notice the difference anyway! Especially with the "extreme" quality streaming on Spotify on iOS devices.

EbookReader · Jun 1, 2012

Spotify Revenue:

2008: $0.612 million USD
2009: $18.1 million USD
2010: $99 million USD
2011: $236.4 million USD
2012: projected at $889 million USD

Spotify Valuation:

February 2011: $1 billion valuation
May 2012: $4 billion valuation

EbookReader · Jun 5, 2012

http://mashable.com/2012/06/04/xbox-music/

Xbox Music Will Bring 30 Million Tunes to Your TV, Smartphone, Tablet

nuckinfutz · Jun 5, 2012

I think Apple would be foolish not to deliver a streaming service.

They just need to find out how to leverage their ecosystem to make this work for all parties involved.

I like the flexibility of iTunes Match and adding a streaming service audio makes total sense.

EbookReader · Jun 26, 2012

http://www.businessinsider.com/spotify-revenue-labels-2012-6

Spotify is now the No. 2 revenue source for the major music labels, a source close to the company tells us.

The No. 1 revenue source for labels is Apple's iTunes.

iTunes paid approximately $3.2 billion to record labels in 2011, Business Insider Intelligence estimates.

The gap between Apple and Spotify remains extremely large, our source tells us.

"iTunes is way up here," our source said, gesturing up high, "and everyone else is way down here."

spotify pays about $600 mil in 2012 (if it's $895 mil revenue projection is correct).

Itunes is skill King by a long way at $3.2 billion.

nuckinfutz · Jun 26, 2012

EbookReader said:
http://www.businessinsider.com/spotify-revenue-labels-2012-6

spotify pays about $600 mil in 2012 (if it's $895 mil revenue projection is correct).

Itunes is skill King by a long way at $3.2 billion.

What took you so long? I was waiting for you to update this thread.

Spotify is a ways away but they're closing in on a billion in revenue and I know of few publicly traded companies that don't want to add a billion in revenue to their bottom line.

I still contend that Apple would be foolish not to get into streaming music. Steve Jobs was NOT correct. Not all people feel a desire to own music.

EbookReader · Jun 27, 2012

nuckinfutz said:
What took you so long? I was waiting for you to update this thread.

Spotify is a ways away but they're closing in on a billion in revenue and I know of few publicly traded companies that don't want to add a billion in revenue to their bottom line.

I still contend that Apple would be foolish not to get into streaming music. Steve Jobs was NOT correct. Not all people feel a desire to own music.

People don't own movies/tv shows with Netflix/Hulu but they both gain popularity.

Look at Cricket's Muve Music. They offer something like $65 for unlimited talk, text, data AND unlimited music downloads on an Android phone. (I wonder if Muve Music will come to Cricket's iphone too).

And Muve Music has over 600,000 paid subscribers in the USA in just 1 year. The company has about 6 million wireless subscribers so that's 10% of their installed base.

Imagine ATT or Verizon doing their own "Muve Music."

Between the two, they have something like 180 million subscribers. 10% of that would be 18 millions.

To put things into perspective, Spotify currently has around 3.5-4 million paid subscribers.

Apple To Launch A Spotify-Like Service this year?

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