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Editor’s Notebook: Another “killer” week — or not

September 18, 2013. The so-called Pandora Killer launched — it was iTunes Radio. Why did the media swirl widely conclude a lethal impact on Pandora, the market-leading online radio brand?

Distribution power. The same mighty precept activated fear of Microsoft taking over the web browser industry with it put Internet Explorer into Windows. The operating system wins — that’s the reasoning, and it has logic. People attach themselves to platforms and portals, preferring to use services and features of their chosen platforms rather than go outside the wall to find alternatives.

In that context, Apple owns a huge advantage as it prepares to launch Apple Music tomorrow. Over 500-million iPhones have been sold. Music is a mobile medium. It is natural to speculate that Apple Music could be a “Spotify killer” as on-demand music is introduced to millions of potentially new consumers.

It might. But it’s worth recalling that Pandora was not killed, or injured, or impeded at all following a slight dip in the first post-iTunes Radio month. Pandora executives called it tire-kicking. Pandora currently has 79-million monthly listeners. Apple does not break out its iTunes Radio audience metrics.

What are some of competitive dynamics of Apple Music’s arrival this week?

Differentiation: Precious little in the on-demand service, from what observers can see today. One point of difference is that Apple Music will provide a platform for artists to have personal pages in the service — that could be quite interesting for both musicians and listeners. Beats 1 is a live Internet radio station that is also a unique feature. Beats 1 is separate from Apple’s on-demand subscription plan, so, differentiating though it is, Beats 1 will probably not lure Spotify users to exit their Spotify plans.

Relationships: Apple owns credit card relationships with hundreds of millions of consumers. That’s a powerful advantage, one which drives many affiliations around the world between music services and telecom companies.

Consumer Habit: One of the most difficult challenges in online content publishing is to get users to change their habits. Here, Apple faces a disadvantage with people who are already subscribed to Spotify, Rhapsody, Rdio, or another music plan. The reported three-month trial period will get a lot of tire-kicking, without doubt. But without compelling differentiation there is little reason for a users to abandon the music collection work already done in another service. For new users, though — people who have not dipped their toes into the on-demand stream anywhere, that three-month on-ramp is a juicy introduction that will result in new addiction at some level of scale.

Overcoming Conceptual Difficulties: Most consumers prefer free listening, lean-back style, that resembles traditional radio to some degree. The concept of subscribing to music, like to television, is still relatively new, somewhat alien in both the music-collection and radio-listening cultures, and mostly unaccepted in the mainstream. So if Apple’s fight is primarily for new, unconvinced users, Apple Music must sell them on the concept, in addition to the service features.

As I was writing this article, Spotify sent over a fact sheet of its audience and distribution statistics. “In case you are reviewing any new music services this week,” the note began with sly good humor. We will review Apple Music, with great interest in a major new player in an already jam-packed subscription market where there seems to be more supply than demand. Apple is late to the party. It was late with MP3 players, too, and quickly took over that market. It was late with iTunes Radio, with no evident impact. Time will tell with Apple Music.

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Brad Hill

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