Daniel Gordon

About the Author Daniel Gordon

Daniel Gordon is a junior at the University of Michigan studying Political Science. He is currently the Director of Consulting for the Tamid Group at Michigan, a consulting group that works with Israeli start-up companies. Daniel is from Atlanta, GA.

Analyzing the Risk and Reward of Apple Music

One week following the June 30 launch of its new music streaming service Apple Music, Apple Inc.  (NASDAQ:AAPL) is poised to dominate yet another sector of the technology industry. While there are challenges ahead for Apple Music, the service’s almost unlimited access to online music streaming and storage paired with its innate advantages over its competitors provides Apple Inc. with a clear pathway to success.

How it works

Apple Inc. provides users with a three month trial period on Apple Music, thereafter charging $9.99 per month for an individual or $14.99 per month for a family membership (there is also a free option with limited features). Once an individual has registered for the service, they are then able to stream music to their iPhone, iPad, iPod touch, Mac, and PC. Apple Inc. has announced that the service will also be compatible with the Android phone in the fall.

The service allows users to stream from over 30 million tracks whereby they can listen to the songs in real-time and download them onto their personal Apple Music library for offline listening. Furthermore, the service allows users unlimited skipping on Apple Music radio stations and expert music recommendations based on the songs in their Apple Music library.

Apple Music relies heavily on Apple’s cloud storage system, iCloud. By aggregating the songs on iCloud, the service enables users to save storage and listen to music on multiple devices without having to transfer the music between devices each time a song is added.

Criticism and obstacles

However, while Apple Music’s use of iCloud provides the user with tangible benefits, it also creates hardships for frequent music listeners. Once an Apple Music account is initiated, the user’s Apple Music library is automatically transferred onto iCloud. Occasionally this transfer has resulted in tracks being lost or similar tracks replacing one another. For example, an “explicit” version of a song could replace a “clean” version of the same song from the user’s Apple Music library when it is transferred onto iCloud.

Apple Music will also face a struggle in the coming months to retain and develop an audience of paying listeners who continue using the service instead of switching to one of Apple’s competitors. Furthermore, Apple will face an uphill battle tapping into the younger, music-loving demographic who is prone to use pirated websites to download music for free.

Another concern that may arise in the months to come is whether or not artists and their labels choose to keep their records on the music streaming service. After Apple announced the three month grace period where customers do not pay the monthly fee (and artists and their producers would also not be paid), country music singer Taylor Swift announced that she would be pulling her music from the Apple Music. While Swift changed her mind after Apple agreed to pay the artists and their producers during that three month trial phase, her actions could foreshadow other artists weighing the cost-benefit factors of keeping their music on Apple Music.

Learning from past failures

Despite the challenges that lie ahead for Apple Music, Apple enters the market as more skilled and shrewd given the failure of its software-based, music-orientated social networking and recommender service, iTunes Ping. Ping was launched on September 1st, 2010 and was discontinued a little over two years later.

Ping was initially a joint venture between Apple and Facebook. However, prior to Ping’s launch Facebook pulled out of the service over contract disputes with Apple. Despite Facebook’s exit, Apple still launched Ping which led to major issues with the service leading to its eventual discontinuation.

Unlike Ping, Apple Music was not started as a shared partnership and rather is solely formed and executed by Apple. However, Apple Music also took some of the elements of Ping that did work including the commenting feature. Given Apple Music is Apple’s second shot in the music recommending industry, Apple has a competitive advantage over its competitors who are getting into the field for the first time now.


There are many competitors in the ever-growing music streaming industry. While this fact makes Apple’s entrance into the market daunting, they have an innate advantage with customer acquisition given the vast number of consumers who already own an Apple product such as an iPhone, iPad, iPod touch, or Mac where Apple Music can be accessed (with 800 million iTunes users with a credit card attached to their account, Apple has the luxury of having to spend close to nothing for customer acquisition).  Furthermore, Apple Music will automatically come to every iPhone and iPad with the iOS 8.4 update later this month.

The following are descriptions of three of Apple Music’s biggest competitors:


  • Price: $9.99 per month (same as Apple Music)
  • Trial period: two months (three months for Apple Music)
  • Free option: can choose songs to listen to with ads (cannot choose songs to listen to on free option for Apple Music)
  • Family plan: $9.99 per month + $4.99 per extra person ($15 per month for six people on Apple Music)
  • Library size: 30 million songs (same as Apple Music)

Google Play Music

  • Price: $9.99 per month (same as Apple Music)
  • Trial period: one month (same as Apple Music)
  • Free option: advertising-free access to streaming music videos on YouTube (cannot choose songs to listen to on free option for Apple Music)
  • Family plan: no family plan ($15 per month for six people on Apple Music)
  • Library size: 30 million songs (same as Apple Music)


  • Price: $9.99 per month (same as Apple Music)
  • Trial period: 14 days (three months for Apple Music)
  • Free option: none (cannot choose songs to listen to on free option for Apple Music)
  • Family plan: $14.99 per month for five people ($15 per month for six people on Apple Music)
  • Library size: 32 million songs (30 million for Apple Music)


Unlike some of its competitors who rely on their revenues from their music streaming service to make a profit, Apple does not need Apple Music to be a big money maker. In fact, Apple Music just needs to break even to make it a worthwhile venture for Apple.

Given the fact that Apple Music is not the primary revenue source for Apple, the streaming service can be classified as an accessory for the iPhone, iPad, iPod touch, or Mac user. Furthermore, the TV shows, movies, and podcasts that were added onto the Apple Music server were never intended to make money, but instead to incentivize the purchase of Apple hardware—where the company makes the vast majority of its money. Just like iTunes brought Windows consumers to take a closer look at other Apple products, so too Apple Music could bring customers to purchase other Apple products.

As Apple enters the already competitive music streaming market, their flexibility of not using Apple Music as their primary revenue source gives them a competitive edge moving forward.

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