So it seems we are in the heat of battle. We are witnessing the war of the music streaming service providers. The media has been full of stories of music streaming providers lowering prices, consolidating services and buying up competitors. For consumers this is a great thing as it means more choice and lower prices in the end. The top contenders for our dollars are currently iTunes (Beats), Spotify, Deezer, and Songza (Google). Is it possible that we’re moving towards a “music as a feature” model? Could Apple, Google and perhaps Microsoft offer a premium music streaming service for free?
Music as a feature?
Google, Apple and Microsoft have a ton of capital and could potentially offer music completely free if they wanted to obliterate their competition. By the way, according to Forbes, “Apple has $160 billion in cash available.” They could easily pay for all its subscribers fees and have money left over. Tim Cook, if you’re listening, have you considered this option?
Just imagine the possibilities here, free music for Android devices and free music for Apple devices. This is a very realistic scenario with the huge cash reserves these two companies have and would solidify the positions of these giants as market leaders. How could anyone compete with that?
What about the possibility of “music as a feature”? Our smartphones have consolidated so many past devices into one. Look at cameras and video cameras for example. Remember video cameras? I remember literally just 5 years ago spending about $300 for a JVC MiniDV video camera and the quality was horrible compared to what I get out of my iPhone 6. Fast forward 5 years and now I get a high quality video camera virtually free in my phone.
Music as a feature isn’t too far fetched. Look, you’ve got Google with Songza and Apple with Beats. All you need now is Microsoft to buy Spotify. You’ve got 3 mammoth size companies with tons of capital and each with its own mobile device platform. It only makes sense and if all three participate then the competition remains at the device level. All the “record” stores have already been obliterated anyways. Why not simply “buy” the music industry itself?
How much money does the music industry need? According to the IFPI the music industry as a whole is currently bringing in $16 billion per year. If you have Apple, Google and Microsoft giving the industry $1 billion a piece every year that may cover subscriptions considering the industry has other revenues streams including merchandising, concerts, and CD sales to mention only a few
Okay I admit it may be a little far fetched. $1 billion a year is a lot of money. But when you have $160 billion in pent up capital is it really? Just imagine the interest alone on $160 billion. It must be enormous. Anyone a math wizard out there and care to calculate the interest or investment revenue range Apple could be earning on such a sum?