Venture Bytes #11- Streaming The Future?

Streaming The Future?

Lately things are coming together fast in the mobile and social spaces. Payments, streaming services and other new areas, are seeing the rapid and convincing rise of dominant players. While not everyone remembers these days, music was the start of the mobile revolution. The iPhone came on the heels of the iPod and would not likely have emerged without the iPod’s success. Even the iPod was not the first. Mobile and music have grown up together. Pandora, Spotify and others have re-forged the strong links between music, mobile and new social paradigms. This makes good sense to almost everyone, as there is much that is intrinsically social about music. As far back as archeological evidence and cave art, music was made to be shared.

Apple, recently augmented by the acquisition of Beats, is set to debut it’s new streaming music offering. The roll out will be by way of an iOS update to hundreds of millions devices and fans. Apple is offering a service that is very similar to the present market leader, Spotify. Spotify has grown to over 18 million subscribers paying around $10 per month and over 42 million ad supported free listeners. Apple offers better family pricing, an artist social network and more active human curation, along with DJ run radio channels. We strongly suspect that these will be exciting features, especially to those who are most enthused by anything from Apple. The real differentiation will have to come from data gathering, legacy iTunes relationships and operating system leverage.

Apple music offers a Spotify type bundle with iTunes, a social network called Connect and full iOS and OSX integration. Artists have and will continue to populate their own Facebook or MySpace style fan social pages. The idea here is to have unique content that is available only on Apple Music as the streaming core offering, around 30 million tracks, is not very differentiated. Curated DJ run stations and some live event support offer a highly sharable way to harness users to highlight unique content in their social graphs. The integration of the streaming service with the iTunes accounts users already have, is unique only in that it leverages the huge and fairly loyal music following that Apple already boasts. Lastly, the cross promotion of Apple Music and the data capture to iOS are significant. Apple Music is another reason to stay with Apple, buy their high margin phones and not leave Tim Cook’s walled garden.

As Apple rolls out Apple Music, it will be bundled into the latest iOS update. Thus, Apple will be able to do what once got Microsoft in so much trouble. This will help enhance user growth. Hundreds of millions of us will get the new music app, like it or not, need it or not. Just like we all got that Apple Watch app and our beloved U2 album. All Apple releases attract millions of dollars worth of free publicity and this is good across the range of products. Most valuable is that Apple and affiliates will have the opportunity to collect and analyze the most relevant and real time data on trends, user behaviors, ever collected in the music industry. This is the area we see the greatest opportunity in.

We see live music and discovery as the keys to this space. No one really has made a discovery process for new bands work. Yet! We see the streaming of live music and the genuine ability to introduce new songs, bands, and music as the Holy Grail. Whoever gets discovery to work first will win. It will be exciting to see if that is Spotify, Apple, Google, Amazon, Pandora or someone new?

Also featured in this edition is our news section containing articles from Bloomberg, Re/code, and Techcrunch.