2023 in Review: Apple Music
Hello, hello! A number of folks reached out to me over the last couple of weeks to chat or get coffee, which is to say the offer remains open. Over the last month, I updated the newsletter’s archive to include all my newsletters dating back to the original 2017 Tinyletter days. Nice to have the complete archive in one place for once. If you do enjoy the newsletter, share it with a friend, subscribe here, and let’s now dive into Apple Music.
The trajectory of Apple Music is curious. The music streaming platform launched in 2015, built on top of formerly Beats Music, and was quickly pitted against Spotify, the then-dominant streaming company in the market. Apple’s relationship to music can be traced back to Steve Jobs’ own love of the Beatles through the massive success of the iTunes store since the 00s. Apple Music was given quite a bit of legitimacy to challenge Spotify in this new world of music streaming and was not-so-subtly heavily endorsed by the major labels who weren’t particularly keen on Spotify’s free tier. The reality was a bit different. Spotify by the mid-2010s already set up a strong foundation of telecommunication company deals and mobile adoption and Apple was far more on the back foot entering this market than label executives and media commentators understood at the time.
Let’s be frank, Apple Music in 2022 was a bore. The company announced a live concert series that included Billie Eilish, Harry Styles, Wizkid, and numerous other stars. This is pretty much staple content of any digital music platform, including Apple, over the last couple of decades. So, no points for that. The company announced an“intimate” concert series, which again…been there, done that. In December, the company announced Apple Music Sing, which allows users to adjust vocals and use the lyrics feature to perform low-stakes karaoke. Neat, but unremarkable. In fact, maybe the most interesting story with Apple Music in 2022 was nothing yet coming from its purchase of Primephonic, a classical music app. So far it’s only resulted in some classical music playlists, not a fully dedicated app experience the company’s earlier press statements suggested. These efforts may be unoriginal but Apple Music did make headlines in another significant way in 2022.
In October, Apple announced a price increase for both Apple Music and Apple TV from $9.99 to $10.99 and $4.99 to $6.99 respectively. The latter’s increase shouldn’t have been shocking given nearly all other streaming video platforms are at least double if not triple that price. The increase in Apple Music was met with near-universal relief by the record industry. The $9.99 price for music streaming can be dated back a couple of decades back to the days of Pressplay and MusicNet, and it has become under heightened scrutiny over the last couple of years with industry watchers eyeing slowing streaming growth matched refusal to budge on pricing.
Apple characterized the decision by saying: “due to an increase in licensing costs, and in turn, artists and songwriters will earn more for the streaming of their music.” Over the last couple of years of increased public pressure on streaming platforms to better compensate artists an often understated option for companies was to just implement price hikes. An industry-wide misunderstanding of the function of music piracy provided cover to not increase prices for all these years but the increased inflation and higher interest rates that so far have disproportionately hit the technology sector have ironically allowed for an easier rollout of price increases. Amazon Music, in a surprise to myself admittedly, said its prices would also rise. Regional and specific bundled plans have seen increases but the across-the-board increase certainly gives way not only for the likes of Spotify to increase but for more steady price hikes to enter the market. The artificially low prices of streaming might rise but the damage of reducing the number of other competitors entering the market over the last decade-plus is already done.
The industry may have welcomed Apple’s price increase but many folks (Spotify in particular) are still frustrated by the so-called “Apple Tax” that forces companies to give up 30% of revenue on purchases made in-app. Last spring, the European Union took up Spotify’s complaint about Apple holding back innovation because of this particular policy. Spotify and Deezer just wrote another letter to the European Commission on Apple in an effort to keep up the legal heat on the company burning. Apple still hasn’t relented on the policy but the continued pushback is because for many firms being able to directly monetize in-app would be a great boon for their respective business. So, while it’s worth keeping an eye on these ongoing legal battles, Apple Music continues to benefit from this anti-competitive advantage.
During the first five years of Apple Music, the product was consciously trying to compete with Spotify and YouTube. That’s why it created its own algorithmic playlists, projecting a narrative about its editorial playlists, and many many attempts at video content. The result in 2023 is a relatively successful music streaming platform, which judging by Spotify’s financials, since going public, isn’t really a great business. Yet, Apple with the tens of billions it brings in every quarter from hardware sales alone is more than fine to absorb those costs. Still, the company much like Amazon isn’t trying out new ideas or even appearing interested in anything beyond outsourced label marketing. An added plus for major labels, in particular, is that Apple and Amazon, at least publicly, are far less cantankerous than their Swedish counterparts. Apple Music is just another money-losing venture for a billion-dollar tech company, still committed to losing money in more fabulous ways (self-driving cars, augmented reality glasses, etc.), so one need not worry about cashing those checks. The money didn’t go anywhere, the aspiration for more, certainly did.
The DCMS Committee in the UK released its updated report from its primary November findings, which were met with cheers from the major labels who avoided any further scrutiny. These additional suggestions are curious in calling for a more coherent music policy out of the UK, empowering the working groups around metadata/transparency, and still wanting more clarity around some of the initiatives major labels have taken to better compensate musicians. The momentum for larger change appears a bit stalled but the amount of attention around this topic appears to have really set up a pretty clear roadmap of what may be on the table in future legislative discussions.
Now for layoff news. Spotify announced a workplace cut of 6% that could represent nearly 600 employees at the company. This comes after aggressive pandemic-era hiring and spending hundreds of millions of dollars since 2019 on podcast acquisitions and deals. The live-streaming app Sessions shut down right before the holidays, as reporters noticed a string of upset messages from former employees and unpaid artists. I wasn’t ever too keen on live-streaming, even during the pandemic’s peak, but still, I wish the best for folks looking for new work. Soundhound, a voice recognition company with some “AI” gimmicks, reportedly laid off half of the company after already letting go of 10% last November. What’s striking to me was the financial information that said the company lost nearly $30 million last quarter on only $11 million of revenue. Yet, it went public via SPAC with a valuation of $2.1 billion. Make it make sense. Not 100% related to music but Microsoft in its layoffs got rid of its teams working on virtual and augmented reality, which again raises questions to me about all of the record industry rhetoric about these particular branches of tech being music’s future.
A Note of Financialization
Quite a few big-name deals dropped this month. Dr. Dre sold off a solid chunk of his song rights mostly to Shamrock Holdings with Universal Music Group picking up the remaining pieces. Reportedly Dr. Dre sought $250 million and got closer to $200 million, again showing the softness of this asset class; also the difference in what Shamrock got versus BMG affirms to me why the bigger record labels were always a bit hesitant to overspend on these catalogs. Hipgnosis Songs Capital bought Justin Bieber’s publishing, master artist royalties, and neighboring rights also for $200 million. Warner Music Group purchased the “music rights and income streams” from Yes, the prog band, during their days at Atlantic Records; then Primary Wave also announced buying a buffet of copyright from two members of the Doors. Seeker Music, a newer firm in this space, bought the catalogs of songwriters John Ryan and John Bellion; they also got additional catalogs from Family Affair Productions and Arthouse Entertainment.
6 Links 2 Read
At Least Let the CD Die with Some Dignity - Music Business Worldwide / Did the Music Business Just Kill the Vinyl Revival? - Ted Gioia
Two stories highlight how the record industry is perhaps a bit too eager to jump onto the latest technology, while older ones settle into maturity.
Has the Streaming Slowdown Arrived? - Midia Research / U.S. Vinyl Album Sales Rise for 17th Straight Year — But Growth Is Slowing - Billboard
Just a couple of headlines pointing out that the record industry is no longer in an era of significant year-over-year revenue increases. Now, this cannot be surprising but judging by the way this trend is covered in the music business press you might correctly not realize streaming wasn’t preordained to see endless growth.
WMG’s Oana Ruxandra on Music’s Evolution: ‘Conservatism is Out the Door!’ - Music Ally
Oana Ruxandra's aggressive lean into web3 and metaverse continues to separate WMG from its major label peers, who’ve been more restrained in this space. The sheer number of investments and partnerships makes me curious about what success might, or might not, mean for WMG with these efforts in the coming years of more unstable financial conditions compared to when these initial deals were made.
Public Radio’s Winning Strategy: Music Discovery - Billboard
A handful of public radio stations realized there may be a niche for actually playing new songs by artists for fans still committed to the medium. Again, even though new technologies emerge and can disrupt parts of certain industries, continuing to innovate and work within one’s own niche can reap rewards.
Late Payments as a Systemic Issue in the Cultural Industry - Technomaterialism
This explores the decrease of working-class participation in the culture industry and the many loopholes that exist in the limited protections for freelance workers. This piece is mostly centered on Europe where there are certainly more protections than in the United States but I’d be remiss not to mention that Kathy Hochul, the governor of New York, vetoed a bill that would’ve helped freelancers late last year. So, the rallying cry at the end of this piece to organize these workers is one that can be heard across the Atlantic.
Stop Filming People in Clubs Without Their Consent - Vice / The 24-hour City: the Night Belongs to Us - RICS
Yes, ostracize phone users at the club. Now the economic and political questions surrounding nightlife are def ones I’ve entertained over the years. In New York City there is a nightlife major, admittedly with limited resources, that mostly exists to connect small business owners and city government, so I do like how this report attempts to look closer at the working conditions of those employed in off-peak hour jobs.