Apple to Announce New Streaming Music Service Next Week [WSJ]

The WSJ is reporting that Apple will announce a new streaming music service next week, as previously rumored.

The announcement is expected at the company's Worldwide Developer Conference and will intensify Apple's competition with Spotify, Pandora, and traditional broadcast stations.

The WSJ is corroborating reports that Apple will offers its music streaming service at $10/month, similar to Spotify; however, it won't let users stream its entire catalog on demand free of charge. Rather, it's planning to augment the free iTunes radio service with channels programmed and hosted by DJs such as Drake, Pharrell, and David Guetta.


Apple has been rushing to finish work on the new service and secure licensing deals with music companies. It hasn’t closed deals with the three biggest global music companies, Vivendi SA’s Universal Music Group, Sony Corp.’s Sony Music Entertainment and Warner Music Group, owned by billionaire Len Blavatnik’s Access Industries, according to people familiar with the talks. Many in the music industry expect such deals soon. If Apple doesn’t get its licensing deals done before the conference, it could delay its announcement long enough to wrap up negotiations, a scenario some in the music industry described as possible but unlikely.

Sources say that Apple sees opportunity in generating revenue from existing iTunes customers and expanding the universe of streaming-music subscribers. It's new radio push is reportedly aimed at users outside the U.S. who don't have access to Pandora and who could eventually become paying customers.

Over 110 million people purchased music on iTunes last year. The average customers spent $30 throughout the year. Convincing those customers to switch to paying $120/year may be difficult; however, if Apple is successful, it would be lucrative for the company and record labels. There is some concern that move could backfire, if subscribers only come from the avid iTunes purchasers who spend over $120/year.

The new music service will be advertised heavily and could offer a free trial period. The iOS Music app will updated to add support for the service and Apple plans to launch an app for Android users as well.


Notably, Apple isn't expected to immediately move Beats Music subscribers onto the Apple Music service; rather, it will keep Beats up and running while it works out any kinks with the new service before migrating users.

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