Forget About Dre: Why the Apple Beats Streaming Service is Destined to Fail

By James O Malley on at

At some point in the next few weeks - possibly on June 8th at the start of its Worldwide Developers Conference - Apple is widely expected to announce a new Beats Music streaming service to compete with the likes of Spotify. But making a success of the Apple Beats streaming service could prove one of the company’s biggest challenges yet.

That’s right - it seems that when Apple splashed out $3bn last year on Dr Dre’s company, it wasn’t just after a pair of overrated headphones. The expectation is that the new service will offer a similar deal to Spotify - with unlimited streaming from a catalogue of pretty much every song ever recorded, for a monthly fee. It may, like Spotify, even offer a free tier.

And critics of Apple would probably say that it is about time too. Despite the company’s noughties renaissance being built on the success of the iPod, sales of music from iTunes have been falling since streaming emerged. At the start of this year, it was reported that download sales are falling for the first time - owing to the success of streaming services, which continue to grow. Apple needs to change its tune.

All signs should point to a relaunch of the Beats Music app being a roaring success. After all - Apple doesn’t usually do failure. Apple’s usual approach to business is to storm into a market with something incredibly slick, and blow the existing players out of the water.

Smartphones existed before the iPhone - but it took Apple to make them great, and a thing that normal people might want. Tablets existed too, but it wasn’t until the iPad that they made sense. We’re seeing that pattern repeated now with the Apple Watch. Apple is never first to market, but once it arrives it is almost the only player which matters.

So the question is, can it do the same thing with music streaming? It seems to me that this time, in this battle, the odds may be against it.

In the Shadow of Spotify

The reason is fairly simple: Spotify has been around for a while now, and unlike phones, tablets and watches, the service is entrenched - and will be difficult to budge. Spotify currently has over 60m active users - with over 15m paying for one of Spotify’s premium subscription services. The company also claims that it now has over 30m songs available on the service - and that over 1.5bn playlists have been created in the app.

The question for Spotify customers who see the new Beats offering is going to be: What does it do differently? Will it cost less? And how much hassle is moving?

For Apple, it must have been a strange experience watching the recent disastrous failure of another streaming service that was backed up by a super-trendy music-mogal, Tidal. Astonishingly, Jay-Z’s service only relaunched at the end of March, yet it has already faded into obscurity, becoming as the cliche goes, it’s owner’s one hundredth problem.

Despite a launch event which saw a veritable who’s who of the music industry take to the stage and pledge their allegiance to the new platform, the app quickly fell out of the Top 500 apps on the App store, as customers didn’t see anything new or worth putting their money into. Seeing an already rich group of people asking for more money probably didn’t help much either.

On a technical level too, Tidal’s app has also received criticism for not being up to scratch. Why switch from reliable Spotify?

Apple Beats Streaming: Pre-Installed for Your "Convenience"

So the warning signs are there. But Apple isn’t Tidal. Whilst the latter was more a damp squib than an app that would make waves, Beats will be launching with the full backing of a platform holder. In other words, just as Apple forced us all to download U2, it could also force us to install Beats on our Apple devices. As one of Apple’s own apps, it could also conceivably integrate more deeply with the iOS operating system, enabling features that Spotify can’t. Perhaps Beats could be used to play music in the background of games, or songs and playlists could be exchanged via NFC?

So really… what could wrong? Apple isn’t that stupid - it is the richest company in the world. What’s stopping it from conquering streaming? Essentially, the reason it will struggle is because Spotify is already extremely popular - and motivating those existing users to make the switch might be a tough ask.

Consider high street banks. Chances are that you use the same bank now as you did when you were a kid. Sure, you could choose to move your current account to a competitor and earn a slightly higher interest rate on your money but… well… Ugh. Who can be bothered, right? There’s plenty of rational reasons why moving your bank account might make sense, and I could bore you for ages debating it, but ultimately… why bother? The differences are minimal, and you already have somewhere to store your money. So why go to through all of that hassle?

For Spotify’s existing customers, they’ve spent time saving not money, but music - building playlists, starring tracks and so on. So to ask customers to throw that away and start again is a big ask. And who can be bothered with that?

Spotify also has the advantage of being entrenched in other ways: Its apps are available on a wide range of platforms, and its Spotify: Connect platform lets you listen to your Spotify music on a wide range of different devices.

If it is Apple’s intention to work with other hardware manufacturers, such as Sonos, it will take time for developers to get up to speed and build Beats apps for their platforms. And given Apple’s position as a dominant player in so many other spaces, Beats is less likely to be platform agnostic. Is it possible to imagine Apple building a Beats app for Android? What about for PS4? The fact that Spotify is an independent company means that it can work with both sides of fierce rivalries.

Spotify is further entrenched by the network effect. Because playlists can be shared, and the app itself hooks up to Facebook, if you’re a new user looking for a streaming service, chances are you’ll pick the same one that your mates use, so you can interact with them on it. It is the same reason why you’d want to buy an Xbox One if all of your friends are Xbox players - even if the PS4 is, on paper, the technically superior machine.

The Apple Maps Effect

The other challenge for Apple is that making the Beats product distinct will be difficult. Ultimately, Beats will have more or less the same catalogue of music available as its rivals (give or take a Taylor Swift or two). Unlike the battle between, say, Amazon Instant Video and Netflix, Apple won’t be able to compete on content. If there is any substantial difference in the catalogues on both services, chances are that it will be to Apple’s detriment. In addition to the major music labels, Spotify has already brought many of the independents on board - if Apple hasn’t struck streaming deals with the same, it will mean less songs are available.

It is conceivable that we could be looking at a debacle similar to when Apple arrogantly launched Apple Maps, which was technically impressive, but crucially lacked the database with information as detailed and accurate as Google Maps, consigning it to the iPhone folder that most people save for apps that they don’t use, but can’t delete.

Whilst Apple will certainly pose the biggest challenge to Spotify’s hegemony yet - it is far from guaranteed that the relaunched Beats will succeed. Unless Apple does something really impressive, Dr Dre might find his patient DOA.