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As others point out, it doesn't make much sense for Apple to attempt this (not paying content producers during a 3-month trial) for the sake of money alone - th
by dperfect 11y ago
As others point out, it doesn't make much sense for Apple to attempt this (not paying content producers during a 3-month trial) for the sake of money alone - they have the cash (even if subject to high taxes) to pay for a loss leader like this.
If that's not the primary motivation, I can think of two alternatives:
1. Apple lacks confidence in rolling this out - they don't even know if they'd make back their money using a loss leader of this magnitude. They don't feel that the service alone has any meaningful advantage over the competition, so they feel a need to compensate with an extraordinarily long trial period, and they're willing to abuse some of their market power to strong-arm content producers into (hopefully) covering the bill. As a tiny part of their overall business strategy, they are unwilling to make any large bets on it, regardless of their ability to cover a loss.
- or -
2. (probably more likely) Apple is so myopically over-confident that they believe this service will disrupt the music industry in the same way the App Store changed software distribution. They honestly feel that they are creating a new market here, not trying to steal market share from other streaming services. Consequently, they don't feel a need to justify covering any expense to content producers because in Apple's mind, content producers will give anything for the privilege of existing on Apple's revolutionary new service. This would represent a new opportunity for revenue above and beyond what the music industry has already come to expect.
- IBM 11y agoThe case for the latter is extremely strong despite how you've framed it. Apple Music will overnight be on an install base of 700-800 million iOS devices plus Macs (and available on Android and on iTunes on Windows). That combined with the fact that Apple's customers have regularly shown they are willing to pay for apps/services/media makes it extremely likely that this service is going to rapidly expand the market for streaming customers in a short period of time. It's been reported that Apple's goal is a 100 million customers for Apple Music, that's 5 times the number of paid customers Spotify has.
- dperfect 11y agoGood points. Still though, I'm not sure install base alone will expand the overall market significantly, at least not quickly. Everyone I know with those devices already spends money on music in some form (subscription-based or digital downloads), or simply wouldn't pay for music at any price (they will milk the trial periods though). I anticipate many will switch to Apple Music, but that will be a switch, not a new form of spending. Also keep in mind that parents may be willing to spend $.99 here and there for their kids' apps (which adds up fast, but not in a way that feels obvious), whereas few will be happy to sign up for a recurring subscription without at least weighing it against the well-known competition.