At its annual Worldwide Developers Conference this week, Apple (NASDAQ:AAPL) announced its all-new music streaming service, Apple Music, in an effort to revitalize its place in the music industry. Digital music sales have been on the decline as listeners migrate to streaming services such as Spotify, and Apple is trying to get in on the trend.
Apple Music is a combination of a streaming music service; a live, 24-hour worldwide radio station (Beats 1); and a music discovery and promotion tool for unsigned artists, called Connect.
Jimmy Iovine, the Beats Electronics co-founder turned Apple employee (after Apple purchased Beats for $3 billion last year), made a point to highlight Apple Music's three functions in the conference keynote presentation, so let's take a quick look at each one.
The Apple Music app
First up is the Apple Music app itself, which combines all of a user's music into one place. All music files on the phone -- from ripped CDs, etc. -- will live right next to music purchased in iTunes. The app's users can play any music in their catalog or stream individual songs and albums. Apple says its streaming catalog will encompass 30 million songs and tens of thousands of high-definition music videos.
The app also has a "For You" section that will select music using algorithms and human-curated picks from new music releases and playlists. There's also a tab for new music that will feature new albums and artists each week.
Apple Music also integrates well with Siri, allowing users to ask the virtual assistant to play an artist's best songs, the No. 1 song from a certain year, or a band's best hits.
Connecting with music fans
To woo artists to use the new Apple Music service, the company is using the new Connect feature to allow them to post photos, videos, and new music in the app. Connect lets music artists post their Apple Music feed and Facebook at the same time, allowing them to potentially grow their following through the app.
Apple has had a hard time engaging users in services like this in the past (think Ping), so we'll have to wait and see if music lovers want this type of engagement or if artists will update their feeds enough to get Connect off the ground.
Apple Music Radio for the masses
Along with the streaming service and Connect, Apple also debuted Beats 1, a live, 24-hour worldwide radio station with curated music from famous DJs Zane Lowe, Ebro Darden, and Julie Adenuga. Listeners around the world will hear the same music, interviews, and other content at the same time.
Apple Music Radio will also have radio stations, ranging from indie rock to classical, hosted by DJs. The main difference between this and just listening to another radio app is that Apple Music lets you skip as many songs as you want with your subscription.
What all this will set you back
Apple will charge $9.99 per month (which is not the cheaper alternative to competitors that I initially thought it would launch), but users can try out the service free for three months. And for families of up to six on the iCloud Family Sharing plan, Apple will sell a shared monthly subscription for $14.99. The service will be available on June 30 on iOS devices, PCs, and Macs. There is no free, ad-based version of Apple Music, in stark contrast to Spotify and Pandora.
Apple intends to launch the Music app on Android devices later this fall. Android's large footprint will give Apple Music significant room to grow outside the iOS ecosystem.
Why Apple needs this
I've written before why I think Apple is launching this new music streaming service at the perfect time, but here's a quick recap:
- Warner Music Group said in the most recent quarter that music streaming revenue for the first time surpassed sales of the company's music downloads.
- Nielsen SoundScan said in January that on-demand music streaming was up 54% for all of 2014, while sales of digital albums and individual tracks were down.
- Research from P. Schoenfeld Asset Management shows that by there will be 250 million worldwide music streaming subscribers generating over $16 billion in streaming revenue.
Meanwhile, Apple's iTunes media sales (including music, books, and video) are on the decline as people move toward streaming. For 2014, iTunes digital music sales alone fell 14% worldwide.
With Apple Music, the company is attempting to move away from digital download sales and toward a more sustainable model of selling streaming subscriptions. We'll have to wait and see if Apple can convince users to pay for music subscriptions rather than listen for free on Spotify and Pandora, but Apple Music appears to be a big step in the right direction.
Chris Neiger has no position in any stocks mentioned. The Motley Fool recommends Apple, Facebook, and Pandora Media. The Motley Fool owns shares of Apple, Facebook, and Pandora Media. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.