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Apple Music Launches, Devours iTunes

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Apple premiered its paid streaming music service at 8:am this morning featuring an industry standard $10 per month on-demand content, curated playlists, and global radio station “Beats One.”

The only disruptive shocker in the launch is the $15 per month “family plan” for six members will devour iTunes profitability as millions of Apple Music users decide that their roommate and “besties” qualify as their brothers and sisters.

Apple Music is described by re/code as “a handsome, robust app and service that goes well beyond just offering a huge catalog of music by providing many ways to discover and group music for a very wide range of tastes and moods. But it’s also uncharacteristically complicated by Apple standards.”

The Apple Music’s home screen uses circles with genres and artists to gauge user taste. But from there, users must navigate to the global terrestrial radio stations and “numerous suggested playlists for different purposes in different places.” The company offers little navigation guidance through its dense number of features, so this learning process will not be attractive to users that just want to kickback and listen to radio.

The service’s strengths are smooth integration of a users’ existing library of iTunes songs, ability to create streaming playlists of songs bought from iTunes or ripped from CDs and music can be streamed offline, even though they live in the cloud.

The real reason for Apple’s launch of streaming music is that iTunes is imploding. Nielsen’s sales data estimated that the number of songs listeners streamed increased by +54 percent in 2014, but it grew by +91 percent in the first 25 weeks of this year. Music track sales, where iTunes dominates, fell by -14 percent in 2014, but plummeted by about 15 percent in the first 25 weeks of 2015.

Many Wall Street analysts have been predicting that Apple iTunes and Apps with a 90 percent profit margin and currently contributing 10 percent of company revenue, would grow to 20 percent of Apple profit by 2020. But it seems clear iTunes profit is at risk of collapsing and Apple was forced to launch a streaming product to save market share.

The 2011 Harvard Business Review in its disruptive innovation section published ‘Why Spotify Will Kill iTunes.’ The HBR summed up Apple iTunes fate as: ‘It is walking, talking, and continuing to pretend it’s alive, but Spotify, Europe’s outrageously successful streaming music product, has just shown us the future.’ Just as iTunes launch in 2003 doomed the bricks-and-mortar retail music industry, HBR predicted that in a few years, Spotify streaming  will implode Apple iTunes dominance and profitability.

Apple Music’s first victim will be to quickly devour Apple iTunes during the 3 month free trial period for Apple Music, since users will now be able to “rip” copies of streaming Apple Music songs to add to their music collection stored on the Apple cloud. Whatever profitability Apple Music’s makes on their $10 per month steaming service will be further undermined due to the “family plan” that allows six users at $15 per month.

Apple Music does have upside with its 24-hour a day live-radio station, Beats 1, that is seeking to upend Pandora. The service began broadcast in more than 100 countries worldwide and is being programmed by such viral DJs as BBC Radio 1’s Zane Lowe in Los Angeles, Ebro Darden in New York and Julie Adenuga in London.

Despite all the alternative digital music services to choose from — iTunes, Spotify, YouTube et al, radio is still the number one way for 51 percent of the 243 million Americans 12 and older to discover new music, according to Nielsen data.

With iTunes on the ‘Eve of Destruction’ thanks to Spotify et al, Apple was probably better off devouring their own child than allowing Spotify to finish it off. But for Apple’s corporate management that is just coming out of intensive-care after their brand was body-slammed by 95 pound Taylor Swift, they better get down to this sick beat:

“Cause the players gonna play, play, play, play, play
And the haters gonna hate, hate, hate, hate, hate (haters gonna hate)
I’m just gonna shake, shake, shake, shake, shake
I shake it off, I shake it off
Heart-breakers gonna break, break, break, break, break (mmmm)
And the fakers gonna fake, fake, fake, fake, fake (and fake, and fake, and fake)
Baby, I’m just gonna shake, shake, shake, shake, shake
I shake it off, I shake it off”


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