Apple (NASDAQ:AAPL) is making a bigger push to matter in digital music. When Apple Music launches on June 30, the world's largest consumer tech company will take the best of Beats Music, Apple Radio, and iTunes and roll it into a unified platform with upgraded features and playlists.
It's bold. It's ambitious. It's not a lock to succeed. Let's go over a few of the reasons why Apple Music might not be singing a merry tune this summer.
1. The market is being cornered by non-tech giants
It seems as if the titans of tech want in on the booming streaming music market. The three behemoths that watch over the three mobile operating systems of choice have thrown their hat into this ring over the past couple years, but they have failed to stand out. The smartphone revolution might be driving the popularity of streaming apps, but Spotify and Pandora (NYSE:P) are running away with this markets
Pandora and Spotify combine for more than 154 million active listeners. While much has been written about Pandora's audience consisting largely of freeloaders who accept ads with their music, it's probably no coincidence that Spotify announced that it topped the meaty milestone of 20 million premium subscribers during the same week that Apple Music was introduced.
Consumers seem to flock to music sites run by companies for whom music is the lone priority. That will never be Apple.
2. Apple has dropped its own baton in digital music
There's no denying that Apple put legal digital music on the map. The iTunes Music Store legitimized the practice of paying for tunes when peer-to-peer piracy was the norm. The digital storefront resulted from the game-changing success of the iPod.
It's a new world these days. Apple's ill-advised attempt at giving music a social spin -- Ping -- folded in 2012 after two years of sputtering. iPod sales have also declined for a couple years now. Apple's $3.2 billion acquisition of Beats Electronics resulted in greater visibility for the headphone maker's Beats Music subscription platform, but it too has struggled under Apple's watch.
Apple has had more misses than hits lately on the music front. It's hard to see why Apple Music will make the class act of Cupertino a rock star again.
3. The music industry's friend is becoming a foe
Apple arrived too late to the streaming revolution, and it hasn't had the desired results. It rolled out the Pandora-esque iTunes Radio in fall 2013. This was supposed to help drum up music sales as consumers unearthed new music worth buying. It hasn't happened, no doubt alarming the major record labels.
Apple doesn't specify how iTunes Music itself is faring, but industry tracker Nielsen reported that digital album and single sales were down 9% and 12%, respectively, in 2014. If iTunes Radio is a hit, it's not carrying over into actual sales.
There's also the problem with Apple Music launching its platform by promising three free months of access to folks that agree to automatically renew as a premium service unless they cancel first. That might seem like a compelling value to consumers, but some record labels have voiced concern about Apple insisting that it won't pay royalties for streams conducted under that trial period. They argue -- and perhaps rightfully so -- that they shouldn't bear the burden of Apple Music's acquisition costs, and there's chatter that some of the larger indie labels will hold off on placing at least new releases on the service. If selection becomes an issue, Apple Music will be dead in the water.
Apple may have ushered in the era of legal digital music, but it's not easy to stand out these days. It might be more humble this time -- promising an Android app in the fall is a smart move, for instance -- but the consumer tech giant appears to be a beat too late these days when it comes to digital music.
Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Apple and Pandora Media. The Motley Fool owns shares of Apple 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.