Apple Trash Talking Spotify As It Prepares Its Competitor
from the all's-fair-in-love-and-competing-with-steve-jobs dept
There’s yet another rumor going around that Apple is getting ready to launch a subscription music service. That’s been rumored for ages, and it would be surprising if the company didn’t do it. In fact, many were surprised that after Apple shut down music locker Lala that it didn’t immediately launch a cloud based subscription offering. But, perhaps more interesting, is the fact that Apple has also been spending time trash-talking Spotify to music industry execs. We had mentioned, when Apple shut down Lala, that it would be a good time for Spotify to figure out how to launch in the US. The company has been trying for quite some time now, and the record label demands are basically impossible to meet. And it sounds like Apple is encouraging that. As Greg Sandoval reports:
In meetings in Los Angeles recently, Apple executives told their music industry counterparts that they had serious doubts about whether Spotify’s business model could ever generate significant revenues or profits, according to two sources with knowledge of the discussions.
But Apple executives worried about the effects of a free music service might have on the rest of the market. They noted that it’s tough to sell something that someone else is giving away, the sources said. One industry insider said it is only logical that if Spotify were allowed to launch a free-music service here, at a time when Nielsen recently reported that the growth of digital sales has flattened out, it could eat into the businesses of proven revenue-producers like Apple and Amazon.
Ah, the amazing ridiculousness of confused short-term thinking. While I also have questions about Spotify’s ability to generate significant revenues long-term, the recording industry is making a huge mistake if it buys into the idea that Spotify is likely to cannibalize digital sales. If you look at reports in places where Spotify is widely available, such as Sweden and the UK, the reports suggest that what Spotify actually cannibalizes is unauthorized downloading. Yes, there are a bunch of reports that suggest Spotify gets people away from The Pirate Bay and into a system that at least gets the labels some money.