Strategic positioning of Apple Music - the history, present and future of Apple Music and the music streaming industry.
Team: Tyler Beck, Rhea Kumar, Bhargav Dindukurthi, Janani Balasubramanian
March, 2022
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Apple Inc., founded in 1976, in Los Altos, California is an American multinational company specialized in producing consumer electronics, software, and online services. Apple earned a revenue of $365.8 billion in 2021 with a year-over-year growth rate of 33.26%. Among the various services offered, Apple Music (henceforth referred to as “AM”), launched in 2015 after Apple’s acquisition of Beats Electronics, is the largest contributor of Apple’s Digital Content services and the second most popular Apple Service after the App Store. AM is a paid monthly subscription service where users can stream lossless music ad-free and listen to the radio. Its mission is to provide a curated listening experience with on-demand radio. It is commonly bundled as an entertainment package with other Apple services and hardware. While AM started with a rather minimal product, they managed to acquire 11 million subscribers. Over time, they further increased their customer base to over 78 million users today and has the most monthly active users of any service in the US. By prioritizing artist relationships, focusing on high audio quality, and leveraging its ecosystem, AM has sought to differentiate itself as a preferred service for music lovers.
There are a few key ways in which Apple claims AM is differentiated.
When assessed in totality, many of AM’s product choices suggest that Apple is attempting to make this product particularly well positioned towards premium, “audiophile” customers who care deeply about the artists and the music they listen to, beyond casually browsing for good music.
There is a rich history of music streaming before AM even had its first day on the scene. Spotify launched in 2006; in the ensuing 9 years until AM’s launch, they accumulated 22 million subscribers and 68 million free accounts. Steve Jobs was strongly opposed to the idea of music streaming, which allowed competitors to create good products and grow quickly, giving them the first-mover advantage.
When Apple acquired Beats in 2014 and inherited their streaming service, Beats Music, they were positioned to enter the relatively nascent streaming market. Apple applied an artist-centric approach to Beats Music, along with some existing iTunes functionality, and entered the market.
With AM’s debut in June 2015, their strategic pillars could be seen in their feature set. Specifically, AM launched with the Connect feature; from the press release:
“Artists and fans now have an incredible way to connect with one another directly in AM with Connect. Through Connect, artists can share lyrics, backstage photos, videos or even release their latest song directly to fans directly from their iPhone. Fans can comment on or like anything an artist has posted, and share it via Messages, Facebook, Twitter and email. And when you comment, the artist can respond directly to you.”
To differentiate from competitors by leveraging existing artist relationships, AM hoped to add value for both artists and fans through its social features. Moreover, it was betting on an ecosystem of engagement with music beyond just listening.