AdAge has a long article trying to puzzle out why Apple potentially "sacrificed iTunes" in approving Spotify's streaming music app
. Oddly, while the article touches on a few of the reasons, I don't think it clearly highlights what seems like the most obvious reasons:
- As we noted when the app was approved, Apple appears to be somewhat gunshy, following the FCC inquiry into why it "blocked" Google Voice on the iPhone (and, yes, Apple still insists it didn't actually block the app, but Google says otherwise). Given the scrutiny, Apple probably realized that it was in for some serious political trouble if it blocked an app like Spotify, which would have received a lot of press attention. Oddly, the AdAge article doesn't mention this at all.
- Apple has always viewed iTunes as something of a loss leader to help it sell more iPods and iPhones. If someone else can help sell more of the devices, then more power to them. Though, the fear, of course, is that something like Spotify works on other devices too.
- But this brings up the final reason: I would bet that the folks at Apple are pretty damn sure that they can outlast and out-innovate Spotify. Spotify hasn't shown much ability to make money, and while it has become a press darling as a music app, I wouldn't be surprised to find out that Apple's quietly been working on its own version of a Spotify-like offering built directly into iTunes. And, given Apple's standard operating procedure, if that's the case, there's a good chance that the Spotify-like iTunes will be even better than Spotify itself.
So, I don't think it's that confusing why Apple approved Spotify (and Rhapsody). I'd argue that the first reason was the biggest driver. Without the FCC investigation, it wouldn't have shocked me if Apple had denied the app if only to buy itself time. But, I would expect that sooner or later, Apple will come out with its own streaming version of iTunes with very strong integration into the iPhone, and suddenly Spotify won't look quite as interesting.