Ever since Apple acquired Beats Electronics nearly a year ago, the world has been waiting for the company to launch a streaming music app. With the clock ticking down to Apple’s annual Worldwide Developers Conference (WWDC), the Wall Street Journal reports that our expectation will soon be fulfilled.
The unnamed on-demand music service is rumored to be priced at $10 per month with no free streaming available. Instead of offering a limited, ad-supported free version like Spotify, Apple will offer ad-supported radio channels run by celebrity DJs. BBC Radio 1 host Zane Lowe has already been hired for the gig; other rumored DJs include the likes of Drake, Q-Tip, and Pharrell.
But Apple may be getting ahead of itself as it searches for its digital radio hosts. The company has yet to sign deals with the major record labels-Sony Music Entertainment, Universal Music Group, and Warner Music Group—although it is said to be getting close to terms and expects to close on them soon. If talks falter, though, it could delay the announcement of the new platform.
Although iTunes is synonymous with digital music, Apple has a lot of ground to make up when it comes to streaming. Spotify and Pandora each have large shares of the streaming market, and even second-tier services are becoming more competitive; Rdio recently reshaped its plans to offer a low-cost option.
Apple may rely on some unconventional means to compete with the existing services. Beyond the DJs, Apple will also reportedly make its streaming service available for Android devices. It would be an unusual step for the company, but there is precedent for it. Apple’s acquisition of Beats gave it Beats Music, which was available for Android, iOS, and Windows Phone. Apple CEO Tim Cook told Financial Times that the apps would remain on those platforms, saying, “It’s all about the music.”
One thing that will work in Apple’s favor as it enters the fiercely competitive streaming market is the fact that the current market leaders still aren’t profitable.
The vast majority of Spotify listeners are free users on the ad-supported system. While reports of streaming royalties vary wildly, the final figures are almost always underwhelming. If Apple’s pay-only service can gather a user base as large as Spotify’s while making them pay a monthly fee, it may finally be the service that breaks the unprofitability curse.
But that’s a big “if.”