iphone-now-playing-spotify

There is an accelerating transformation of music listening; that much is clear. And if you change the way people listen, you will change the way people produce. So who and what wins in this brave new world? Let’s consider.

The month of May brought still more signs of tectonic shifts, with Apple buying Beats and Spotify showing no signs of slowing. The Apple acquisition of Beats can’t really be measured in dollars, because Apple has so much cash on-hand. (US$150 billion – and expect that dry powder to start getting loaded into cannons.) At least unlike Facebook or Google, Apple doesn’t just randomly burn that cash on speculative purchases – you know, like Oculus Rift or robots. So this is really about strategic value, given they’ve waited this long to touch their war chest.

Apple with Beats, of course, combines two leaders in a whole mess of categories; it’s obvious, but it’s worth saying again. Apple makes the most popular computers for producing music, the most popular mobile device for playing music, the most popular computer software for listening to music, and the most popular store for buying music downloads. Beats makes the most popular hardware accessory for listening to music, and while they don’t have the most popular streaming service, they’ve got perhaps the closest relationship to the music industry of any streaming service. (Remember, Apple’s last acquisition got them … NeXT, and Jobs. This time, they get Jimmy Iovine, a veteran of Interscope-Geffen-A&M, and loads of connections from both Dre and Iovine to the music scene in LA.) Beats are a huge player, whether you like them or not.

Then there’s Spotify. No one else doing streaming is currently playing in the same league – not even Apple – and streaming continues to grow as download sales continue to sink. (35% growth in streaming versus a 13% drop in sales, as in the USA? Yeah, like that.) Add to that the appearance of Spotify in very-usable form in DJ apps (in the form of Algoriddim’s djay), and – relevant to us music makers, anyway – there’s something big going on.

Here are, I think, the winners in that landscape:

The whole consumer widget. Consumer listening – hardware, software, and service all together.
Streams for everyone. Streams for listeners and casual DJs.
Pros for the stuff you don’t stream. Downloads, physical media, and production-friendly tools for more serious DJs, enthusiasts, and producers.
Humans. The ongoing power of the human being.

In other words, music just got a lot more holistic and a lot more human than ever – even against the backdrop of music as a service as available as electricity or running water. You need everyone from good, quirky DJs to branding specialists and industrial designers, and everyone matters. So strap in.

Yeah, those. But there's something to the ubiquity of this logo. Only Apple and Sony have done it before quite like this. Photo (CC-BY) pooliestudios.

Yeah, those. But there’s something to the ubiquity of this logo. Only Apple and Sony have done it before quite like this. Photo (CC-BY) pooliestudios.

Winner: the consumerization of music listening. Complain all you like about the quality of Beats headphones. They’ve captured the imagination of the public in a way no other brand can – not Shure, not Sennheiser, not any of your favorite brands. (Not that that’s stopped respected makers like Audio-Technica from doing brightly-colored cans for retail in the hope of getting in on the action. Look at DJ headphones, and your local music store now looks more like Best Buy than ever.)

There just isn’t a brand that says headphones to people – not other than Beats. Beats have done that, and convinced consumers to pay premium price for mobile listening, something that only Apple and Sony have done before. That’s no small accomplishment. Remember, most kids today have no idea who Dr. Dre is. This is the power of the brand Beats now – and Dre deserves some serious credit for fighting to make that happen.

The upshot in all of this is that brands matter; consumer impact matters. And you’ll notice one brand in each category: Apple. Beats. Spotify. This isn’t Coke versus Pepsi. It’s Coke, and then some small niche players (a nice bottle of organic Cabernet for the specialists, sold in small batches).

Winner: those Beats headphones. Sorry, but that also means you’re going to keep seeing those headphones. (Apple Store placement has probably helped that over the years, too.) And, hey, they’re actually not that bad. A CDM reader who works for Beats quietly handed me a white pair of Beats Studio headphones at Musikmesse last year. To my surprise, they’re actually rather good in terms of sound, they’re insanely rugged (more so than my studio headphones), and reasonably comfy, if rather heavy; I’ve even traveled with them to give my ATH-M50s a rest. These aren’t the same Beats made by Monster, the company’s earlier partner, some of which were absolutely horrible. They’re fine.

Would I recommend them to someone? No. You can get a significantly better-sounding pair of headphones for literally half the price. But that comes back to the marketing issue. I’m betting a lot of people who buy Beats haven’t ever tried the other headphones. Be glad they’re listening to your music on these and not white earbuds.

Spotify

Winner: Spotify – and streaming. Apple’s investment is a second vote of confidence in streaming – on top of iTunes Radio. Otherwise, they could have simply bought some headphone manufacturer and stuck their logo on it, and that’s not what they’re doing. And the numbers don’t lie: people are streaming more, downloading less. That trend should only accelerate as Internet access, both wired and wireless, gets faster.

Spotify wins even with Apple buying Beats, because it validates their market-leading position – which means they can get more capital if they need it, and their value has gone up in any future acquisition deal. Paradoxically, I think that means Apple buying Beats guarantees the future of Spotify – they’ve already got the mindshare, the listeners, the subscribers, the music collection, and now they’re valuable enough that it’s hard to imagine anything driving them out of business, at least for now. The only wildcard is if Apple finds some ingenious way to build a better streaming tool. But if Tim Cook is to believed, Beats has done that already – and it hasn’t made much of a dent in Spotify’s listeners.

With Spotify’s future secure, and with Apple investing in streaming, no amount of wishing on the part of artists or labels can make the streaming model go away. And that means –

Drip

Winner: Music as service. The success of streaming doesn’t have to mean the end of downloads, but it most likely will mean a change in how people buy those downloads. Downloads will still be the medium of choice for serious DJs, for audiophiles, for collectors. But all those markets are streaming these days, too, which means they’re likely to expect to be able to get those downloads via a service. That’s why Drip.fm, the startup from the folks behind Ghostly International, makes sense – and why they’re signing cool labels at such a speed. By providing a “wine of the month”-club model for your favorite artists and labels, they allow those aficionados hooked on music to pay a monthly fee for a steady stream of their favorite work. (Another clever idea: Hotflush Recordings offers a member card that gets you guest list to events along with downloads.)

beatportpro

Winner: Downloads for “pro” DJs (for now). Serious DJing is likely to remain the one haven for downloaded files – for now. Licensing rules mean that no DJ app appears to be able to access music from a streaming service offline — yet. Slow access, especially in clubs (called “underground” for a reason), means you’d have to be nuts to rely on a streaming connection to DJ any serious gigs – yet. All these variables could change in the future, but you’ve got to gig this weekend, so that doesn’t matter.

That also means download sites (like Beatport) that cater directly to the DJ market and dance music fans are likely to thrive. See also: labels’ own stores. (Now’s the time to invest in making those things you’d want to actually use.) And Bandcamp looks great for the same reason, especially as artists discover labels are too oversaturated to take on more artists.

The importance of iTunes, however, might continue to shrink, unless Apple figures out smarter ways of driving download sales from streams. (iTunes Radio actually works beautifully in this regard, but the problem is no one uses iTunes Radio, and the radio itself is poor — too many repeated tracks. Maybe a Beats/iTunes mash-up will solve that; we’ll see.)

Winner: Internet-connected DJing. All of this said, streaming DJs are going to be a thing, too. If you’re playing a wedding, or a friend’s party, or a small bar, or any number of casual gigs that make up a huge part of the DJ market, streams start to make sense. The pressure is lower in those situations, it’s more likely you can check for a reliable Internet connection in advance, and the importance of requests is greater.

All that was missing was an app that made DJing with streams nearly as easy as playing from Spotify. Algoriddim’s djay is that app. I expect other DJ app developers like Native Instruments and their immensely popular Traktor on iPad to follow soon. It’s also clear that streams pair nicely with mobile DJing.

Minus Records jewelry. Okay... maybe. Something physical, though.

Minus Records jewelry. Okay… maybe. Something physical, though.

Winner: Tangible music. The more downloads shrink, the more vinyl and other physical releases will start to look appealing. And actually, with computers streaming music, it seems at least some DJs will win back dance floor respect by looking to vinyl. Maybe Pioneer really is going to make a turntable. Not everyone can go the vinyl route, so expect more other creative physical products – books and color photos, for instance, still retain value even with digital counterparts, because you flip through them and set them on coffee tables. Music has a different problem: arguing about analog versus digital aside, the reality is that everything eventually reaches a speaker.

Can you expect these to be a significant revenue source? Frankly, in a lot of cases, no. But you can expect a lot to try, and some artists and labels will find some winning formulas, especially if they have the right fans and the right designs behind those tangible goods.

Yes, this is happening. Products like "sounds" at Beatport, for producers, may eclipse track downloads - while the listeners go streaming.

Yes, this is happening. Products like “sounds” at Beatport, for producers, may eclipse track downloads – while the listeners go streaming.

Winner: Stems, samples, apps, content. With pros gravitating toward downloads as consumers go streaming, it also makes more sense than ever to sell a release to other producers. Beatport’s Sounds section is already growing fast – and could be what that business needs to protect itself against the growing incursion of streaming, even into DJ apps. The DJ market itself continues to grow. And these formats provide content that streams can’t; I don’t imagine Spotify or Beats successfully streaming individual stems any time soon, nor would any sane artist or label release them to them. Add in other delivery methods, from custom apps to Ableton sets or Traktor Remix Decks, and you have a spectrum of digital releases that aren’t threatened by streams.

Winner: Industry insiders. Bad news: the Internet didn’t quite work out the way we expected. It’s wound up with kingmakers, just as radio and record labels once had. So, sure, the cost of making music has gone down. But making music was always potentially free: go to a street corner and start singing. Distribution and marketing is what ultimately costs, and the reduction in studio time hasn’t changed that. Now, Spotify and Apple are in powerful positions. And they’ve turned back to that industry to get the biggest, most successful acts. Apple has so much as said in no uncertain terms that they bought Beats partly to get closer to the industry in LA.

beatsmusic_collage

Winner: Human selectors, human personality. Commonly called “curation,” I think “selection” and “personality” are better words. A funny thing has happened as computer algorithms for automatically selecting music have gotten better: people realize that the human beings were there for more than just picking the music. What humans can do is both select music and tell a story about it, in a way an algorithm really can’t. They also can provide a personality around those selections. Beats has invested heavily in this model, even as Spotify has put more into the algorithms. It hasn’t paid off yet, but it could – look how valuable radio still is. (See Evolver on the Beats curators, apart from the celebrity ones.)

Don’t get me wrong: I actually enjoy the algorithms. It’s like a more interesting take on “shuffle.” But the reason radio and hand-picked mixes and podcasts survive is because people don’t just want a playlist, they want a person to go with it. They listen to the radio because it keeps them company. And the more machine algorithms dominate music, the more they may long for that company as a point of differentiation and a way of enriching the experience.

So, the flipside of the staying power of insider industry culture is something more positive: the human DJ matters more than ever.

A must-read that sums up a lot of these trends. BBC’s Radio 1 today exemplifies the new breed. It’s radio, and it’s popular for the reasons radio has always been popular. It has human selectors. They are still kingmakers, still mass-media. They still work with power brokers, even if that landscape is transposed. We’re talking mass media – but mass media on the Internet, driven by statistics in followers on YouTube and the like.

Radio 1′s playlist secrets uncovered: the battle of the ‘brands’

Windows of opportunity. And that to me is the bottom line.

The early days of the Internet came with a lot of illusions. We imagined indie labels and artists would blossom. They did – but the long tail turned out to get so crowded, those same artists often got lost, and revenue streams shrank and were watered down rather than growing. We imagined big power players would go away. Wrong: the big kingmakers might shuffle about, but a few winners would become more powerful than ever. We thought technology would trend toward greater fidelity. It didn’t – not exactly. We imagined quality, in our own eyes, would always win out. That’s always naive.

But there are cracks through which the independent artist and label can survive. The explosion in production and DJing is one. For all that people complain that DJing and making tracks has gotten too easy, that might create the very enthusiast audience that saves a lot of music. It just means that musicians are the ones consuming. Another is the fact that the more our musical world tends to machines producing intangible music that switches on like radio, the more people may seek out human beings and physical goods.

The one thing you can’t expect is for things to stay stable. It seems that if we want to play in this new musical world, we’d better be up for a challenge.

CDM welcomes your thoughts – and any guest posts on these topics.

Correction: An earlier version of this story claimed Hyperdub has a members’ card. I meant Hotflush Recordings (click Members Area for details). We love Hyperdub, too, though. -Ed.

  • xyz023

    I would love to see more of CDM’s thoughts on Google Music All Access. Of all the streaming services, it’s been my favorite.

    • http://pkirn.com/ Peter Kirn

      Curious – what about it have you liked most?

    • xyz023

      Most of all, the diverse and sometimes comprehensive discography for artists; I’ve found Spotify, Pandora, etc, searches for artists come up nil, often. Take for instance, Sun City Girls, Spotify has 2 albums, All Access has 29 albums. For an example with modern electronic music, Spotify carries 1 Octo Octa ep, All Access has all 6 albums. This kind of scenario occurs often for me with non-Google streaming services. There are loads of other great features I love, too. One All Access con – sharing mostly occurs with other All Access users.

  • http://melodiefabriek.com/ Marco Raaphorst

    For streams: Soundcloud and YouTube both eat Spotify. I’m not sure if I have ever seen one Spotify embed on CDM. I guess for young people and music discovery Spotify really is of none importance. And it doesn’t connect bands to fans. Soundcloud does that. YouTube also. Spotify uses middle men. Old system. Will die soon.

    • http://pkirn.com/ Peter Kirn

      Well, I don’t embed services that require subscriptions. (And maybe that only underlines your point!) But yes, mentioning all these numbers on Spotify, I should point out SoundCloud and YouTube, for sure. (I wonder if anyone has done metrics on YouTube, actually.)

      Giving all due credit to those services, though, I wouldn’t underestimate Spotify’s importance and success. YouTube, SoundCloud, and Spotify in this instance each serve different purposes. Spotify has some impressive numbers. You can’t as easily assemble playlists and library collections on either SoundCloud or YouTube. You don’t get these rather interesting apps. You don’t get the same sort of client support on desktop and mobile. You don’t get the same access to music. And I’m impressed that Spotify has managed to gather 10 million subscribers.

      I thought it was interesting that Tim Cook described Beats Music as the one service that got it right. We’ll see what Apple does with them.

      Now – I agree with you that from the artist’s perspective, we need data and connections to fans. I wonder what artists and labels can do to get more of that out of Spotify, Middle Man.

    • http://melodiefabriek.com/ Marco Raaphorst

      I agree, those 10 million subscribers of Spotify are interesting. SoundCloud has many more of them but will not give that money back to the musician, so yeah, this is where Spotify shines indeed. But most Spotify users have a free account. I’m interested to find out what Apple will do with Beats. I do feel that if they don’t lower the monthly subscription fee it will not be a succes. The King of streams is YouTube and that one is so hard to beat. Because YouTube has the most music, the most users, the most user friendly interface. And it’s free. My daughter and everyone she knows uses YouTube. Or ask a 3 year old. An audio only YouTube might be cool, but maybe not.

      Interesting things are happening. It’s a real challenge for Apple, Spotify etc. And you wrote an interesting blogpost about it btw, so thanks!

    • http://vrpr.org/ Henry

      I disagree. Spotify is *very* important, particularly to “young people” (whatever you mean exactly with that). I haven’t got a Spotify subscription, and I do everything I can to avoid it, simply because I don’t like it. But you can not ignore how many people are actually using it. All friends and people I know around me that are interested in music (mostly as consumers, indeed) are using Spotify. Creating and sharing playlists in the most easy way is one good reason to do that. And for many people, there are apparently tons of other good reasons (where being able to quickly find that 80s hit that you want to play on that random party at 3am right now is one of them). So, no, Spotify will not die. It is here to stay. In one form or another.

      Also, don’t underestimate how little it means to “regular people” out there whether or not they “own” any physical thing (a CD, a vinyl record even, or just an mp3 file) that brings them the music they want to listen to. That is a sentimental thing for old people like me (I am 45 and have spent most of my pocket money in teenage years buying vinyl records) or for musicians (pros as well as amateurs/hobby enthusiasts).

      Don’t get me wrong – I love Soundcloud and Vimeo (even though Youtube is inarguably larger) and the service they provide to me as a user, but IMHO they are niche products compared to Spotify and the likes.

    • http://melodiefabriek.com/ Marco Raaphorst

      Spotify has 40 million users. SoundCloud has 250 million users (old numbers of last year). That is a huge difference.

      I’m 45 too. I have a daughter who is 11 years old. Kids are using YouTube a lot for not only music. It’s extremely populair. And not only for kids. Also old people. Everybody knows about YouTube.

      I believe Spotify doesn’t nail it (yet), check also http://melodiefabriek.com/blog/who-listens-to-spotify/

    • http://pkirn.com/ Peter Kirn

      Yeah, exactly – agreed. Actually, maybe time to talk again to SoundCloud.

      Something really interesting has happened in the Spotify versus SoundCloud (or even Spotify versus YouTube) evolution.

      The difference on SoundCloud and YouTube: musicians and smaller labels have the ability to directly share content. On SoundCloud, they’re even paying for the privilege in many cases. And they do that because they can interact with fans and collect data. (See also, on a smaller scale, Bandcamp. Or even things like Instagram.)

      That really makes more sense in this day and age. Spotify acts more like iTunes with streams instead of downloads – oh, and less revenue. That’s not a strong incentive for artists.

      And don’t get me wrong, I hugely enjoy using Spotify for listening. But I notice I’m often tabbing between that and SoundCloud. And I tend to search SoundCloud for music first. I can tell from search auto-complete that a *lot* of people are doing exactly the same. (that is, even when I’m logged out) And it means they can share with each other without having to worry about whether their friend has an account or the client or not.

  • musiclink

    “I don’t imagine Spotify or Beats successfully streaming individual stems any time soon…”

    I’m interested in hearing arguments supporting both of these claims. To me, computing is nearing the end of the first cycle – we started with dumb terminals and mainframes, and we will end with interfaces connecting over high bandwidth (hopefully secure) channels to powerful computers that are not on your person (whether the cloud or your own dedicated “personal super-computer”). With this kind of model, we might start to see things like clubs setting aside dedicated high bandwidth WiFi/Wired networks for the performers/DJs once there is incentive for them to do so (the same way so many businesses gradually added public WiFi to attract customers).

    Then perhaps before we know it, there will in fact be services offering real-time streaming of stems and samples so that musicians/DJs can navigate, preview and use an endless database of materials in their live performances. Of course it all comes down to an elegant interface at the end of the day.

    “, nor would any sane artist or label release them to them.”

    Are you saying that they wouldn’t release to Spotify/Beats specifically, or to any service?
    Maybe we are arguing for the same trends, just you picture this transition being further off, and I picture it being sooner than most would expect.

    • http://pkirn.com/ Peter Kirn

      I guess the nature of stems, too, is that you need the actual file to do any production. ;) So I may have failed to point out the obvious.

      Now, that said, two possibilities:

      In the short term, streaming as preview certainly makes sense; there’s already a category on SoundCloud.

      In the long term, I should probably never say never. It’s very possible that with better connectivity we’ll be working with project files we stream off the cloud. It seems a little odd now, but it wasn’t so long ago we were trading Standard MIDI files over dialup. Things do change…

    • http://vrpr.org/ Henry

      That’s not entirely correct, I’d say. You could indeed stream, say, a vocal stem from somewhere right now at your gig in that club and put it into Traktor to run it over that “DJ-tool” instrumental track. That’s at least how I would understand it could work at some point, couldn’t it?

  • Mike

    I remember trying one of the streaming service, Rdio, for six months. One of the problem I found is that music discovery/playlist- and that unless I’m willing to invest time is near impossible.

    What I’d like is a service that could easily scan through my iTunes list of artists and albums and figure out the type of music I listen to. I hear Google offers that but I’m not a fan of Google going through my things (I’m already on Gmail). I’ll wait for Apple to offer Beats music in my region (Canada) before trying streaming again.

    • http://pkirn.com/ Peter Kirn

      Actually, one of the things that made Spotify useful to me initially was Last.fm support, which did just this. But I agree – this is now lacking.

      The stuff Spotify (and others) have licensed from Echo Nest (which Spotify now owns) is pretty smart about this. But you do have to input the music you want to hear first.

  • wigwatermagic

    Meanwhile the independent creators suffer.

    • http://pkirn.com/ Peter Kirn

      Well… not necessarily. (Suffering, yes, but — that’s hardly new.) On SoundCloud and Bandcamp, etc., we’re getting some terrific data that we can use to get bookings and work with our fan base. And much as pros may hate those Beats headphones, I’m glad people are listening to those in place of those horrible white earbuds.

      Anyway, to me, feeling bad about it isn’t helping — you have to try to work with what you’re given.

  • SomeDude

    A few thoughts :

    1- All music businesses will make more money than ever. Musicians will make less money than ever. From my point of view, there’s nothing to celebrate.

    2- Most indies run away from Spotify, most artists that can control their catalog take it away. Only major labels stay, because they own a share of the company itself. Everyone else gets paid peanuts.

    3- Yet everyone is saying streaming is a big part of the future. Here’s where Apple has an opportunity to strike REALLY big, and I mean massively big thru their Beats acquisition : If they find a way to make streaming financially VIABLE for artists, they will have all artists and all media at their feet. All the artists that badmouthed Spotify will rush to Apple’s streaming platform and publicly praise it.

    Result : Apple’s streaming catalog will have every artist on earth. Spotify’s will see their catalog getting smaller every day from a massive exodus. They will be hailed as the savior of the music industry and of artists.

    Huge PR and free positive publicity for Apple, worth billions…

    One can dream, right ?

    • http://pkirn.com/ Peter Kirn

      Interesting. We’ll see if that happens. “Most indies” – not sure about that. I’m surprised by how many labels I follow have their music on Spotify, even fairly niche stuff.

    • http://vrpr.org/ Henry

      Well, most of what is discussed here sounds like speculation to me anyway. I have not yet seen (reliable) statistics about whether or not “indies are running away from Spotify” or similar statements. I’d love to see some numbers that either stop those legends or confirm what people like us here in this discussion thread mainly fear…

    • Freeks

      “Most indies run away from Spotify, most artists that can control their catalog take it away.”

      Not many. It’s fair to say that 95% of indies and self-releases are in Spotify. It’s starting to be so that if you are not in spotify, your release don’t exist. It’s harder to get gigs without spottily link. No promoter want cd’s or mp3′s these days.

      Apple will have hard time to compete with Spotify if they even will. You have remember that most companies that Apple buys will just be shut down or some part will be integrated to future product. They might have just bought it for the brand of headphones. We don’t know yet.

      Also, do you really think Apple would pay MORE to artists form streaming?
      That’s not the way that company operates. They probably pay less, but give great speech how great opportunity to it is for everybody. If you have not noticed that Spotify is not making profit. They give pretty much everything out. There is just too many to share ;)

      The thought that Apple would make it all better is just so funny :D

    • Somedude

      I don’t know why my last post didn’t show up. I’ll retype it again.
      First, the mantra that “if youre not on Spotify, you dn’t exist” is a mantra pushed by spotify and has no basis. Plenty of indies do alright without spotify.
      Second, the reason why Apple would make it work is ironic , but realistic: because all content is a loss leader to sell hardware for them. They give away the software, and just break even on the iTunes store. Apple makes money on hardware. They could very well treat streaming the same way. They can afford to give 70% or more of the earnings to bring all artists on their platform, drain all competitors platforms, and by that….heck, even make the subscription free with every new iThing sold. Like i said, kill the competition, and be hailed as the savior of artists. Free promo .Result : more people lining up outside the Apple store to buy the latest iCappucinoMachine, where the real money is. Funny as you say.

      Oh , and about Spotfy not making any money .. Daniel Ek “As of 2012 he is ranked 395th on the British rich list with a calculated worth of £190m” wikipedia.

    • http://pkirn.com/ Peter Kirn

      Well, Spotify are making money in terms of revenue, but they’ve had issues with profits.

      http://research.gigaom.com/2013/08/spotify-revenue-up-profits-down/

      (I need a more recent story.)

      iTunes sales are still a revenue source for Apple. And they’ve already launched a streaming service, so we have some idea of how they model this. I think it’s more likely they’ll be looking to build Beats revenues than use it as a loss leader.

    • freeks

      “if youre not on Spotify, you dn’t exist” is a mantra pushed by spotify and has no basis.”

      Actually that has been my mantra before i have heard it it be used by anyone else. There is only two places to look for music: Spotify & youtube. Not in Spotify? One single in Youtube? Forgotten. I do buy vinyls, but only if i really like the album in Spotify. I know one local hiphop label that does not put the latest albums to spottily. Their loss as all those albums are uploaded to illegally to youtube and they get zero from that. Spotify is competiting ok with pirate service like Youtube. It’s hard to compete with free, but still people pay for it.

      iTunes was iPod era product. iPod is dying. Streams work in all platforms. Can’t tie stream to one product so that it would be successful. It has to work in all platforms. iPhones still sell a lot, but it’s more common to see teen with Android phone than with iPhone. Tie your service to iPhone and lose teens. In 2014 iPhone is as lame as Facebook for teens. As teens are the future consumers they are the biggest focus in most companies.

      It’s no news if CEO makes good money in company that makes no profit. That is capitalism at it’s best.

    • http://vrpr.org/ Henry

      iTunes is Apple’s central piece of software on the desktop computer to generate all their content revenue: music, films, tv series, books, desktop applications and iOS apps. *Everything* is maintained through this one single program. And the fact that it is scattered all over iOS with a dozen individual apps doesn’t change the principle. Heck, even iTunes Radio is part of it – and it’s even in the name.

      So, there is good reason to believe that whatever Apple is going to do in the future, they are going to implement it in the market via iTunes. It’s a bloody brand for them that is absolutely priceless.

      Also, personally, I use the preview feature in iTunes heavily. It is very convenient, and in many cases, I would not even want to listen to all songs in full before I decide whether or not I want to buy that album. If it doesn’t kick me with 1:30 minutes previews of the songs, it will likely not do with a full preview feature either.

      Oh, and btw, Apple is already in the streaming market: It’s called iTunes Match.

    • http://vrpr.org/ Henry

      Well, competition will – as always – boost activity on the vendor side. So, yes, one can always dream. But I would rather expect the opposite to happen: If (!) Apple/Beats really kicked current market competitors in their backs with that sensational, revolutionary new concept, those competitors would do everything they can to, well, compete. And that usually leads to more/better services/products at a lower/more competitive price/effort. Which indeed is a good thing for the consumers.

  • http://hidale.com/ Dale Phurrough

    I’m disappointed in the reporting in this article. It is shiny one-sided rather than the more neutral reporting I’ve read before.
    I see the consumer loosing in a few areas:
    - Beats headphones are overpriced and under quality. Consumers continue to be ripped off.
    - Apple does as Apple always does. Overprice and underdeliver. This long known fact of Apple hardware will have a new evil sister called Beats. No improvement here.
    - Streaming helps music labels, ASCAP, GEMA, and other music tyrants. Not consumers. It provides a way to control music listening on their terms. It tricks consumers into thinking they “own” the music…but they don’t. You like that song? Well you can play it today but tomorrow its gone because you don’t have the rights anymore. This happens to Amazon e-books and music streaming frequently.

    • http://pkirn.com/ Peter Kirn

      Well, observing a trend is not the same as advocating it. The difference:

      “YAY! The oceans are rising! Climates are changing! I guess we’re all — screwed! Fantastic!” … etc. ;)

      At the same time, I think it’s tough to ignore those trends.

      Like I said, I’m not advocating investing in Beats headphones. I think the quality has improved from the Monster era, but you can still get any number of $100 studio headphones that will make you happier than a $400 pair of Beats – consumers included, I think. Or splurge on some really comfortable headphones for extended wear.

      And I say specifically that the rise of streaming is making certain power brokers even more powerful.

      Now, a couple of observations:
      If rights expire on streams, that’s actually good for people trying to sell downloads.

      And as for Apple hardware, I’m not sure there’s a direct comparison. Producers flock to Apple machines just as enthusiastically as they flee Beats for Audio Technica, Shure, Sennheiser, Sony, AKG, and so on. Apple’s laptops at this point are fairly price-competitive with PCs in similar form factors and with similar displays. A lot of us are looking hard at the Hackintosh options these days on desktop, but let’s not get carried away here. Apple has done some things with high-performance SSDs and supporting the Thunderbolt bus that I think are very pro-friendly. And as far as Beats, we just don’t know what they’re planning.

    • http://hidale.com/ Dale Phurrough

      I do usually appreciate your reporting, so this article…somehow…seemed out of place. Perhaps I am missing the tone or broader view on the topics that I have previously seen from you.

      Do you write a lot about the business side. Even in your reply above you write “rights expire on streams…good for people trying to sell downloads.” So yes, its good for business…good for consumption…bad for consumers. Its that consumer viewpoint in which this article seems light. The consumers can gorge on whatever might be shiny at the moment…yet is this good mid/long-term for consumers?

      The rumors of Apple killing the defacto 3.5″ audio port on their hardware line and providing only thunderbolt (or another Apple only, non usb compliant solution) are rampant. Its perfectly in line with Apple’s history of a closed system like the unexpandable computers, ipod proprietary portS, ADC, etc. Lock the port…sell the only headphone that connect to it. Apple has done an excellent job at training their users to expect new differing technology from Apple.

      Good for business…good for consumption…bad for consumers.

    • http://pkirn.com/ Peter Kirn

      Separate issues.

      First: the notion that music distribution right now is bad for consumers – sorry, what? For $15 consumers get unlimited access to millions of tracks. They have selection and collection tools for those tracks. They have access to millions more tracks as download purchases. They can spend about $10 a month and get personalized music from labels like Ghostly via Drip.fm (as I mention). They can buy an increasing number of vinyl imprints, CDs, box sets, books, cassette tapes…

      We as producers have all kinds of problems. But listeners have never had it better.

      But it’s not really a matter of whether this stuff is good or bad. It just is; we have to deal with it. Individual producers are not going to change the model of music distribution for the world’s population.

      Second: Apple. I see no evidence that Apple is doing away with the headphone jack. None. Apple supports USB storage, audio, and MIDI on mobile, and USB3 and Thunderbolt on desktop. Those aren’t proprietary.

      Apple bought the world’s leading manufacturer of headphones. I don’t think they did that in order to force people not to use anything else; there’s no upside to them doing that.

    • http://hidale.com/ Dale Phurrough

      I hope you consider the feedback. I have no intention to get into an argument or debate on this. I wish you a good day.

    • http://vrpr.org/ Henry

      Consumers still have the choice. It is the large corporations or brands that are successful, because they make certain products or services easy for the consumers. But you can still go and buy vinyl, CDs, downloads without watermarks… It is just not as convenient and straightforward.

      And rumours of Apple killing whatever… are still rumours. And btw, Apple has always been strong in dismissing what was not needed. If that first iMac wouldn’t have sported those USB ports, would that interface have become so popular? Speculative, I know. But nonetheless important to consider. Also, if you don’t like their approach to what they include with or dismiss from their MacBooks and iDevices, you can still buy a PC or a Samsung phone. All major DAWs except for Logic are available for Windows, too.

    • http://vrpr.org/ Henry

      Why so angry and miserable? There are always two sides of everything:

      “- Beats headphones are overpriced and under quality. Consumers continue to be ripped off.”

      Consumers do indeed decide themselves what they purchase. If they don’t check sound quality of one product over another before they buy – we can agree that this is stupid. But it happens all the time for all possible products. And what is sound quality, actually? Yes, you can measure stuff etc. But to many people, “sound quality” means “phat beats” or whatever the like. And Beats headphones deliver on that. And they deliver on looks too, which is important for a lot of other people. Get out of your ivory tower.

      “- Apple does as Apple always does. Overprice and underdeliver. This long known fact of Apple hardware will have a new evil sister called Beats. No improvement here.”

      This is a long known Apple-hater argument that has been rubbish for a long time. Compare many of their hardware products with equally specced competitors on the market and you will find them rather reasonably priced indeed. Stop comparing apples and pears like all the other Apple-naysayers do.

      “- Streaming helps music labels, ASCAP, GEMA, and other music tyrants. Not consumers. It provides a way to control music listening on their terms. It tricks consumers into thinking they “own” the music…but they don’t. You like that song? Well you can play it today but tomorrow its gone because you don’t have the rights anymore. This happens to Amazon e-books and music streaming frequently.”

      Well, to many people that doesn’t matter any more. They happily accept that they are not filling their shelves with books, CDs, records and other stuff any more. They consume the media content as long as they like and don’t care when it goes away at some point.
      I do agree with you though, that it is a fundamental shift in mindset to allow a vendor take away something from me that I have purchased: The right to read a book or listen to a piece of music or watch a film anytime and as often as I want to. But again, just as above: People have a choice to do either way. And the consumers decide what they want. And currently they want it to be easy for them.

  • http://www.MyRocki.com Nick NM Yap

    My 2 cents, about Music Distribution and Discovery.

    Distribution
    What the internet has done is put the old distribution system to rest. As Richard Branson said in an “If I was 22″ interview, if he had known what internet would do to music, he would have sold his Virgin stores much earlier. But the new distribution system is still very new, in its infancy. Imo, it hasn’t developed even halfway yet and is still developing. Just like the old distribution system, there are “mass market” stores that cater to the average joe and there are specialist stores that cater to special interests. I think we will see more of that developing in the online music streaming services. It used to very expensive to distribute niche music, now it’s absolutely possible.

    Discovery
    Alongside distribution, of course the new form of “music discovery” needs to develop too. The traditional approach of sharing CD, (sharing cassette tapes or even recording off the radio) used to be part and parcel of music discovery. That social aspect needs to develop into a more central role in the new way – and I don’t mean auto FB posts like “xxx is listening to xxxx” that’s not social, that’s just pure spam. Music has to get social again. Not as an algorithm or a click and share button. There needs to be a conducive environment where we rebuild people to people sharing, really passionate sharing. Sharing drives passion, passion actually drives sales. Assuming if everyone or most people have a subscription (= paying for their music), that sharing becomes very legal. For years of internet’s entry into music, we’ve been educated and hammered with the message that sharing music online is “illegal”, destroys music industry. I’m hoping the streaming subscription model has finally put that issue aside. Music needs to get social again.

    • http://pkirn.com/ Peter Kirn

      Nicely put. This discovery issue to me is worth separate discussion, as it’s getting — more multi-dimensional. And it’s interesting to me, too, having resisted at first the algorithmic discovery mechanisms, how those interact with human decisions.

  • Freeks

    “There just isn’t a brand that says headphones to people – not other than Beats. Beats have done that,”

    May i ask where?
    Never seen anyone (or even heard of) wearing them. Seen loads of Skull Candys.
    It’s probably the price. A bit too much for most. Dunno. Never seen one.

    • Freeks

      I googled the answer:
      ” Beats’ market share was 64% in the U.S for headphones priced higher than $100, ”

      My guess is that +90% sold headphones cost less that $100. So real market share is not that big.

    • http://pkirn.com/ Peter Kirn

      You guessed wrong. ;)

      “according to the NPD Group, a marketing research company, Beats controls 27% of the $1.8 billion headphone market — and 57% of the market for “premium” headphones, ones that cost $99 or more”

      Now, that’s not market share in units, but revenue, but still – they’re making more than a quarter of all the money in the business.

      There was explosive growth over the past few years. Beats was in 2012 at US$1 billion in sales. They absolutely own the revenue in this market.

      CNN in January.
      http://edition.cnn.com/2014/01/13/tech/beats-headphones-audio-market/

    • Daniel Davis

      Man, that’s really disheartening. Why are poor quality, overly-expensive headphones so popular? It’s obviously not for their audio quality – although I’m sure most people using them are probably listening to overly-compressed, brickwall-mastered music, so audio quality isn’t even an issue.

      The old Koss Porta Pros sound infinitely better than any Beats I’ve heard, and they’re like $40. But, they definitely don’t look cool, so there’s that… :)

    • http://www.soundcloud.com/2beeps Matt Verzola

      They’re so popular because they look cool.

  • Regend

    Apple can officially be a record label now. They have the Execs and A&R brains, distribution methods, and marketing. They also have influence to sign artists and provide them with hardware/software packages that previously tied artists to “recording budgets.” For example, instead of giving an artist, or band, 25k to go record into a recording studio, Apply can just give them a package of hardware/software so they can do it themselves with an in apple certified engineer and get a producer from the new label.

    • http://www.jhhl.net/ Henry Lowengard

      They’ve even settled with Apple Corp., so the ex-Beatles won’t be after them.

  • rik

    Funnily enough, no mention of the losers in this scenario. The content creators, the musicians themselves. The internet – or more accurately people’s greed and parsimony, the unquenchable thirst for free product allied to the sadly misguided belief that music should be free as the air – will kill creativity. The bottom line is simple, you want a quality product, you pay for it – and by a means whereby the money actually goes to the musician so he can carry on doing what he does. Streaming is not that. Sure, in the short term the consumer wins but what happens when their favourite musicians have all turned to another form of employment – one which will actually put food on their table and clothes on their kids?

    • http://andrenascimento.net/ ElectroBlob

      I agree – services like Spotify are better than piracy only because earning a few cents every month is better than being robbed blind. The bottom line is this is a great business opportunity for the companies running streaming services, and also very convenient for consumers, but right now I cannot see how it will ever become a sustainable revenue model for musicians or composers.

    • http://vrpr.org/ Henry

      But serving the artists better was never the purpose of the founders of companies like Spotify. They founded those companies to earn money.

    • rik

      Well, of course they did, and that’s the whole point. They are making money off the back of someone else’s creativity without giving ANYTHING back to that creator. The old music industry model perhaps wasn’t perfect but at least the musicians got paid for their music. (most of the time, anyway!) There are 2 reasons why streaming is so successful, firstly it’s so convenient and secondly it’s either free or so cheap as to be negligible. I believe that for music – and I mean good, original, creative, well-crafted music made by talented musicians who spend their working lives making it – to survive and prosper, it demands a commitment of time and money from the consumer. This is what gives music it’s true worth as well as its longevity and this is what is being fatally undermined by our greed and people like Spotify who exploit and enable this myopic selfishness. It’s pretty simple really, yeah, everyone wants something for nothing but if you ascribe little or no financial value to the music you consume then making that music becomes a literally worthless pursuit. Progress isn’t necessarily for the better.

    • http://andrenascimento.net/ ElectroBlob

      Henry, that goes without saying.

      As for the rest: what rik said.

      The old 20th century model was unfair, unbalanced, marred by excessive commercialism and little preocuppation with art or the quality of music of the musicians and consumers themselves.

      It also allowed one to pay bills with revenue from record sales and licensing. Go figure.

      The current model is… Well, let me put it this way, there is no current model, really. Just all-out anarchy.

  • Professorbx

    Actually, it was Beats Pro’s, not Beats Studio’s. :) Either way, glad you liked them!