When I heard that Apple was pressuring record companies to effectively kill Spotify’s free streaming tier this morning, I’ll admit I was surprised. Not because I think Apple is some altruistic good guy, of course, but more because Apple is normally much smarter when it comes to going after competitors.
Here are the two likely outcomes if Apple succeeds in getting record companies to end free Spotify streaming:
- More people will just pirate music.
- More people will pay for Spotify subscriptions.
The other likely outcome of this? Apple’s Beats Music will not magically become a beloved Spotify alternative. In fact, the backlash against Apple if it kills free Spotify might be enough to doom Beats Music to being another Tidal.
Let’s recap how we got here. Years after remaking how we buy music via the iPod and the iTunes Store, Apple has fallen way behind in the music streaming business. It launched iTunes Radio to compete with Pandora but it’s become pretty well established that iTunes Radio is simply godawful compared to the competition.
This was one of the reasons Apple shocked the world last year with its acquisition of Beats: It wanted to create a proper music streaming service capable of taking on Spotify. Apple is very likely going to unveil this service at WWDC this year and will likely pitch it as the best place to get exclusive content, similar to the way the iTunes Store had an exclusive window to sell Beyoncé’s last album before anyone else back in 2013.
Apple has apparently calculated, however, that this business model has no shot of succeeding as long as people can get free music streaming off Spotify and YouTube. While this may be correct, I can also guarantee that killing off these free streaming options will not make Beats Music a success either.
Think about it like this: Spotify now has 60 million users, of which 15 million pay every month. If those 45 million users find that their access to free music on Spotify has been shut down thanks to Apple, will any of them actually make the switch to Beats Music? The answer is no: They’re either going to fork over cash to Spotify or they’re going to just steal music.
All of this brings me back to my original point: I’m really not sure what Apple is thinking here. I’m used to the company playing hardball with competitors but at the same time I’m not sure it appreciates the potential for a major public relations blowback if the world blames it for killing off free Spotify streaming.