Reinventing “My Music” – Apple’s New Music Service

Signals that Apple is rapidly approaching launching its new streaming music service are getting stronger all the time. The release notes for this week’s beta of iOS 8.4 made particularly clear something is in the works and it’s coming soon:

The iOS 8.4 Beta includes an early preview of the the all-new Music app. With powerful features and an elegant new look, enjoying your music is easier than ever. This preview provides a sneak peek into what we’ve been working on, and what’s to come — the music is just getting started.

The new app itself makes changes to the interface, but adds no significant new functionality. However, these changes suggest the new music service might well fit somewhere within these confines too. I had some debate on Twitter earlier this week about whether this makes sense and it’s prompted me to finally write up something I’ve been thinking about for a while — how an iTunes-branded subscription service can differentiate itself.

Thinking about who buys music

When thinking about subscription music services, the starting point has to be the people who pay for music today, because you’re unlikely to convert non-payers into people who will pay $120 a year, but you’re much more likely to convert people who buy a few albums a year into subscribers. The reality is the people who spend the most money (but actually the least time) listening to music are more affluent and older than the average. In other words, they’re not teens and young adults but more likely to be in their 30s and more likely to have kids of their own than to be kids themselves.

All this makes perfectly good sense: the older you are, the more money you have to spend, but the less time you tend to have to enjoy what you’ve spent your money on. So you spend money where it has the biggest impact and in ways that save you time and maximize the use of your time.

Conversely, when you’re young and poor, you’re more likely to be willing to spend your time than your money, which, when applied to music, means you have more time to spend in discovery and a higher tolerance for ads and other things which interrupt the listening experience. In other words, there’s a bifurcation between cash-rich and time-poor and cash-poor and time-rich which will tend to drive the former to pay for music and the latter to make heavier use of ad-supported services such as YouTube and the free versions of services such as Spotify.

Note: as with all such analysis, this is an over-simplification, but data from Nielsen and other sources back up the broad conclusions well enough to use this as an underpinning for the analysis below.

Discovery versus ownership

Beats had two key features: it was exclusively a paid service and it was oriented around discovery. Ironically though, that means it targeted elements of both groups without going whole hog after either of them. It was focused on discovery, which aligns better with the younger, poorer group, but charged for the service, which likely eliminated many of the most obvious buyers as potential customers. There are undoubtedly older, wealthier buyers who appreciate the ability to discover new music and there are undoubtedly younger, poorer buyers who nonetheless care enough about music to spend $10 a month on it. But it’s not a great strategic fit and Beats never did very well in gaining subscribers (even paying subscribers) in comparison with other, more popular services such as Spotify, Deezer, and so on. Those services could at least get users hooked with the free proposition and then upsell them as they sought to remove ads from the experience.

When you’re relatively time-poor, subscription services are often a poor fit, because they’re overwhelming. Instead of being presented with a familiar list of stuff you like, you might be presented with a search box, a list of generic playlists which don’t match your personal taste, or a series of album covers for newly released music you don’t know. If you just want to start listening now, the best place to start is often the music you already own, because by definition you already know you like it. That’s clearly not enough by itself, because you wouldn’t need a subscription music service if you only listened to music you already own, but it’s an important starting point for many paying users even in a subscription service.

The challenge with most subscription services is they force you to recreate this sense of ownership in some way within the service – either by manually favoriting this music (another time-consuming activity) or by searching for it each time you want to listen. Some services have attempted to bridge the gap by either importing your owned music into the subscription (e.g. Google Music) or by showing your library within the context of their app (e.g. Spotify). But both of these are cumbersome. The former taking a lot of work to get set up and maintain and the latter providing two very separate experiences awkwardly sandwiched together. In many cases, users are likely opening two different apps depending on whether they want to select music from their own library or new music.

Redefining “My Music”

The only way to make owned music truly part of a subscription music service is to bake it in. And Apple is arguably the only company that can do that for many of its customers because iTunes is where their owned music lives. This means reinventing the concept of ownership, or of “my music” in a way that fits the subscription music model. That collection would be at the core of such a service but the definition would have changed from music you’ve explicitly purchased to music that you’ve claimed as yours. That, in turn, would be a mixture of the owned music you brought with you and the music from the subscription service you’ve added to it. As you experimented with new music – a new album from a favorite artist, or perhaps something someone recommended – you could either temporarily or permanently add it to your music collection. Your “collection” of music would grow, but you’d no longer have to explicitly pay to do so, reducing the risk of trying new music significantly while retaining a sense of ownership.

The corollary to this is that, in iTunes Radio and other discovery-centric environments, you’d no longer be invited to buy the music (though that option might still be there), but rather to add it to “my music”. That would dramatically reduce the friction associated with engaging more deeply with new music, because it no longer involves a purchase. But it also means you could easily:

• replace that album you used to own but that got lost or damaged
• replace the music you accidentally deleted when you switched computers, or that was on that hard drive that died
• fill in the rest of an album of which you have some tracks already
• finally get that album you meant to get but you only knew one or two tracks on

By the way, I’m not sure it’s a coincidence the tab for listening to your own music in the new iOS Music app in 8.4 is called simply “My Music”. One critical element to all this, however, is total transparency about the cloud and local elements of the service. Today, it’s still often hard to manage which elements of your total iTunes music library are stored locally on which devices and this part of the experience would need to be really good for this whole concept to work.

The economic impact could be positive for Apple and the labels

Make no mistake: this absolutely replaces purchasing behavior for these customers but it gives them a very definite sense of ownership over this music as long as they remain subscribers of the service, which in turn should make them enormously sticky. Since these customers tend to spend more than the average on music but spend less time actually listening to music, the economics could work out very well. Limited discovery time means these customers would likely listen to relatively little new music each month, while integrating their owned library means Apple wouldn’t have to pay record labels for their listening to that library. Today, streaming services have to pay for every listen to every song, whether it’s one the user already owns or not. Whether Apple would choose to share the benefits of these economics with labels is an interesting question – it could either pay out at a higher rate because total listening is shared over fewer songs and artists or it could pocket the difference.

One app or several?

One of the questions I debated on Twitter this week was whether Apple would put its new music service into this same Music app or whether it would be separated out. After all, when Apple launches this service, it will have three separate music offerings:

• Traditional iTunes – purchased and owned music
• iTunes Radio – free streaming, but no on-demand
• iTunes On Demand – subscription streaming, including on-demand

Given everything I’ve talked about, I’m convinced if you’re going to split these into two apps, Radio is the one that doesn’t fit. It’s the only element that bears no direct relationship to the music you already own, and it’s entirely plausible as a standalone service. For all the reasons I outlined above, I think iTunes On Demand (as I’ve chosen to call it) should actually be tightly integrated with the traditional iTunes experience. I don’t think it makes sense to separate it out. Given iTunes Radio has stubbornly remained part of the Music app so far, I suspect that will stay too.

The role of discovery

Having said early on in this piece that discovery is less relevant to the target segment for subscription music services, I want to return to that topic as I close. Just because discovery is less relevant doesn’t mean it’s irrelevant in this segment. In fact, being really good at discovery could be a key differentiator for this segment precisely because those in this segment don’t have time for poor discovery experiences. Constantly having to skip songs, train algorithms, hunt and search for new channels or stations is a pain in the neck and actually reduces the amount of time people will spend on discovery.

All this means Apple needs to create the best possible discovery experience as well as the most integrated owned-and-claimed approach to subscription music. Beats majored on discovery and I’ve no doubt that was a major reason why Apple acquired it. But I actually think the integration with traditional iTunes is going to be a stronger value proposition for many of the target customers than integration with Beats, for all the reasons I’ve talked about.