Apple To Buy Tidal?

on.wsj.com/299RyJa

It's talent versus market share, old school versus new, Apple versus Spotify.

Despite a reputation for innovation, we've learned the internet is mostly about consolidation, establishing a paradigm and then conquering all comers. Amazon owns shopping, Google owns search, Facebook owns social networking and...what exactly does Apple own again?

It might be the world's most valuable company, but it got that way via monopolies. First with portable music players. The iPod and FairPlay, remember that, its DRM?, and iTunes ultimately closed out all competitors.

And then came the iPhone and iPad. Which dominated through sheer innovation. Sure, there were smartphones before, but not with this level of sophistication. And the iPad was a whole new category. As for the Watch? Hmm...

That's right, Apple dominated via hardware.

But it appears we're evolving into a software world. And Apple is legendary for getting this wrong, with services, the original failed MobileMe and the disastrous first iteration of Apple Music. Google gets it right, Amazon too, but Apple? No.

And sure, the iPhone takes almost all of the handset profits, but the truth is products have a lifespan. No one uses Lotus 1-2-3 anymore, and even Windows is challenged. As for hardware... You've got a drawer full of stuff too antiquated to use, even though it might only be a couple of years old.

Apple Music is software.

But it's run by an old school content guy. Reed Hastings is all about content, but he can talk innovation at the same time. Ditto Jeff Bezos. Jimmy Iovine is all about relationships, leveraging them to his advantage, is that a dead paradigm or will he win again?

Turns out no one cared that Adele's "25" was not on streaming services. They could wait. This is scarier than the death of physical and files, if people don't hunger for the latest music, we're doomed.

Jimmy's theory is exclusives will bond users to you, that the power of stars is unmatched.

But this didn't work at Tidal, which you could subscribe to for the same price as Spotify (sure, there was a hi-res tier for $20 a month, but there was a low cost, lo-fi option also.) Which is more powerful, the content or the platform?

Hmm...

Apple's exclusives haven't put a dent in Spotify quite yet. But if Apple rolls up the Tidal exclusives too, that would be significant, would it impact Spotify?

Now we get to Elizabeth Warren, now we get to a completely different issue, which may be the death of the Cupertino company. Once you start leveraging your assets to the detriment of others, you're in trouble, this is what hobbled Microsoft at the end of the century. Should Spotify really have to cough up 30% of its subscription revenue to Apple? That's not fair in anybody's book, that's why the Swedish company is now making noise, with Senator Warren on its side. Apple has already blinked a bit, adjusting App Store payments downward in certain instances, but this looks like a cash grab, and when the public learns of this they side with the upstart, which is Spotify.

Spotify is miles ahead of Apple Music in not only paying subscribers, but usability and discovery and... Because, once again, Spotify is run by techies and Apple Music is run by old school Jimmy Iovine. Spotify has vision, Apple Music is about strong-arming insiders to its advantage, never mind the disadvantage of having no free tier.

So how's it going to turn out?

I'm betting on Spotify. The history of the Internet is the innovator wins, especially if it continues to innovate. Microsoft couldn't put a dent in AOL, and then it turned out both were superseded anyway.

We want to be where our friends are. Like Steve Jobs preached, we want usability, which Spotify has in spades compared to Apple Music, even if the former is imperfect. Apple Music LOOKS good, but looks are secondary to functionality.

But if Apple gets exclusives on all Tidal artists, builds from there, it could win. Because he with the hits wins in the end.

So, watch this movie.

And be appalled. That the leveling of the playing field we thought the internet would bring is being eviscerated. It's like radio payola, independent promotion all over again. Sure, Apple might be paying the stars today, but the result is if you're an up and comer you can't get real estate on the home page. And, how long will it be before you pay to get real estate anyway?

Exclusives are not fan-friendly.

Then again, there's a long history of them in the music business, remember how Best Buy helped put a dent in the indie store world?

We're going in the wrong direction here folks.

But I will say that Jay Z might accomplish his goal, which is to get a big paycheck. In this case not by aggregating paying customers, but talent.

Fifteen years ago the music sphere was up for grabs, all hell was breaking loose.

Today, the doors are closing, the big boys are winning, power is being consolidated that will rule for years, all in the name of killing upstarts like YouTube and Spotify because they don't pay enough.

Be careful what you wish for.

"Spotify says Apple won't approve a new version of its app because it doesn't want competition for Apple Music": http://goo.gl/b1yNuU

"Elizabeth Warren says Apple, Amazon and Google are trying to 'lock out' the competition": http://goo.gl/To7mLq


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