Apple has told major record company executives that if they allow Spotify to launch in the US they will jeopardise further growth of the digital music market.
Spotify has yet to secure a US licence from any of the four majors — Universal, Warner, Sony and EMI — and, CNet reports, that is due in part to concerns raised by Apple, whose iTunes store is the country’s number one music retailer.
Citing an industry insider, the report says that Apple has raised doubts over whether music subscription services can ever generate significant revenue. Meanwhile, the easy availability of ad-supported free music would eat into music downloads sales, not just at iTunes but also for the likes of Amazon and, potentially, Google, Apple argued.
Most music subscription services have barely registering on the public consciousness. Spotify, with its acclaimed desktop software, is the most notable exception, but it has yet to turn a profit and Apple is not alone in questioning whether it can be a viable business in the long-term.
Warmer Music chief executive Edgar Bronfman said earlier this year that the short-lived era of free music (at least of the legally licensed variety) is over.
“Free streaming services are clearly not net positive for the industry and as far as Warner Music’s concerned will not be licensed,” Bronfman said. “So this sort of ‘get all the music you want for free and then we maybe we can — with a few bells and whistles — move you to a premium price’ strategy is not the kind of approach to business that we will be supporting in the future.”
Apple declined to comment.
Wayne Rosso, whose Mashboxx is on the list of failed digital music services, said earlier this week that the music industry now has little choice but to do what Apple says.
“The table is now set. There will be no new players of significance to enter the business. Investors don’t want to entertain the remotest possibility of funding any start-up that deals with music, no matter how clever and innovative.”
Consequently there is no threat to iTunes’ estimated 70% market share, not from startups, certainly, nor from Amazon or Google, when its much-touted music service finally goes live.
“The record labels are counting on Google rescuing them from Apple’s death grip,” says Rosso. “Not going to happen. Google may suck up some market share, but not at Apple’s expense. This has been the pattern with Amazon’s digital download store.
“Google is not pitching anything particularly innovative either. Basically an iTunes clone with a paid locker service. … Nobody’s going to pay Google $25 a year to store their music in a cloud.”
