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Apple and the music business : the second revolution

Having transformed the music business once, Apple is trying to do so again
WHEN Apple bought Beats, best known for making brightly coloured headphones, for around $3 billion last
year, many wondered what the technology giant had in mind. They now have their answer. On June 8th, at
Apples annual gathering for software developers in San Francisco, it revealed a new music-streaming service,
based on one it had acquired as part of Beats. Tim Cook, Apples boss, promised that, It will change the way
you experience music forever. Others on the stage called it revolutionary.
Apple led the way in popularising the legal downloading
of music, with the launch of its iPod player in 2001. But
as music fans have taken to streaming songs in a big
way over the past few yearsin effect, renting them
rather than owning themdownloads have started to
decline (see chart 1). Apples revenues from music have
started to fade, even as those from apps and other
services have kept soaring (see chart 2). This time it is
following, rather than leading, a musical revolution.
Spotify, the most popular on-demand streaming service,
has 20m paying subscribers worldwide, and around 55m
who regularly use its free, ad-supported version.

Apple Music will attempt to differentiate itself from
incumbents by having playlists chosen by people rather
than algorithms, and technology that makes it easier to
search for songs. It is marching into the territory of
SoundCloud, a firm that lets unsigned acts promote
their tunes to music-lovers looking to discover the next
big thing. It is taking on Googles online-video service,
YouTube, by making it easy to watch music videos. And
its offering will include a new, 24-hour radio station,
Beats One. If enough of Apples existing customers
take to the new station, it could become one of the
worlds leading influences on popular music tastes.

Apples big announcement raises two questions. The first is whether lumping together so many familiar
elements of existing services into one convenient offering really adds up to a revolution. The second, therefore,
is whether people are likely to pay for what Apple is peddling. Spotify this week raised more than $500m to
help it fend off the challenge. That is a useful sum, but it is small change compared with Apples near-$200
billion cash hoard. Furthermore, Apple already has the credit-card details of around 800m account holders, and
a fan base whose ardour knows no bounds. So it is not hard to imagine Apple Music quickly overtaking Spotifys
20m paid subscribers, once people have taken up the three months free trial the firm is offering, and become
accustomed to using the service.
The best things in life are free
Throwing a possible lifeline to Spotify, the attorneys-general of New York and Connecticut are looking into
whether the deals that Apple has struck with record labels amount to some sort of arrangement to suppress the
availability of free, ad-supported music streaming. This provides a chunk of Spotifys revenues. Apple, in
contrast, has chosen not to offer a free tier.

For Apple the biggest difference between now and 2001 is that the success of this revolution will not determine
the firms fate. When it first released its iPod, Apple was a largish computer-maker with grand ambitions. Fast-
forward to 2015 and Apple is now the most valuable listed company in the world. It is not only a technology
company but a luxury brand and a growing payment-services provider, among other things. Apple Music, in
other words, is just one track in its album.
As for pop stars and their record labels, they should not be celebrating Apple Musics launch by driving their
Rolls-Royces into swimming pools. The fees it will pay them for streaming will be even more meagre than those
they get from downloads.

a) Vocabulary Work : For each of the following either.

Explain the following in your own words or give a synonym or write a sentence using the
word in context

1. Headphones
2. Gathering
3. Stage
4. Streaming
5. Fade
6. on-demand
7. subscribers
8. incumbents
9. tastes
10. lumping together
11. adds up to
12. likely to
13. fend off
14. cash hoard
15. ardour knows no bounds
16. trial
17. lifeline
18. struck
19. chunk
20. meagre

b) Written Work : Summary

Write a summary of this article and provide your reaction or connect the issue to a larger,
relevant context.

c) Listening Work : MP3

Listen to the article using the MP3 provided and read at the same time.
Try to pronounce the vocabulary as you read.