Some years ago, many similar headlines, all pinpointing the same problem appeared in the newspapers: “The music industry…knee deep in a downloading crisis” (The Sunday Business Post, 2008 as cited in Rogers, 2013, p. 126), “Music giants lose fortune in 1.2 [billion] song thefts” (The Times, 2010 as cited in Rogers, 2013, p. 126), “Industry crisis as album sales drop” (The Irish Independent, 2008 as cited in Rogers, 2013, p. 126). As the New York Times accentuated in an article, the illegal downloading of music is a tremendous problem “that robs billion from music” businesses (Rogers, 2013, p. 126).
As a response to illegal downloads becoming such a big problem as CD’s were too expensive, some companies started to found music streaming services which are the logical consequence of the mobile data society (Raukamp, 2015). The streaming services provide clients with much more lucrative option – having access to much more music at once while paying a much lower price. Such technological developments make possible “the distribution and promotion of music online, have revolutionized the industry’s core structure” (Rogers, 2013, p. 75). However, these developments are “diminishing the power of music companies in acting as intermediaries in artist-consumer relationships” (Rogers, 2013, p. 75). The new important actors in this role are the companies providing the easy digital music distribution to their customers. As Charlotte Bouillot (2017, p. 83) points out in her book “Spotify: Music For Everyone”, “consumers are no longer interested in the end product alone, but also in the experience that comes with it”. Therefore, music provider companies are facing new challenges and are obliged to change their way of thinking and bring their product to the customer as conveniently as possible for him while making the experience great.
Apple Music and Spotify are the two streaming services that first come to one’s mind when thinking about music streaming services. These two companies are the most dominate players in music streaming in Germany. They are major global players when it comes to providing various types of music easily to a wide range of people. This paper compares the music streaming services of Apple Music and Spotify in the digital age while focusing on qualitative research data.
To slowly approach this topic, there will first be a general overview of the two streaming services. In order to understand the attributes the users value above the two providers, it is important to understand the general difference of the companies behind the services and the framework in which they provide it.
Following, a SWOT Analysis is conducted and explained. This pattern is a situation analysis and deals with the strengths and weaknesses of an organization, while also analyzing the opportunities and threats faced by it (Business Dictionary, n.d.). Subsequently, it is applied on the example of Apple Music and Spotify. A short summary in the end will list the results of the previously conducted analysis, give an overview on which are the main differences between the two streaming services and answer the research question.
2 General overview of the two streaming services
Apple Music and Spotify are fierce competitors when it comes to providing a platform where users can listen to several million songs without having to download them. Until now, Spotify states that they have less customers cancelling their paying subscriptions since 2015 and more than double the number of paying subscribers of Apple (Sandler, 2018). “While Apple may be lagging behind Spotify overall, it is still gaining ground fast. According to The Journal, Apple Music is expected to surpass Spotify in the U.S. this summer” (Sandler, 2018). But who exactly are the companies behind those services?
2.1 General overview of Apple Music
Apple Music had its commercial launch on the 30th of June 2015, has now around 38 million subscribers and is available in 114 countries (Statista, 2018). First, it is important to be aware that Apple Music is a service provided by Apple which itself is a very popular company that gains thousands of new customers every year. The so-called “Apple spirit” plays a crucial role in the merchandise of their products because it results in very high customer loyalty (Gallo, 2012).
When launching their streaming service Apple Music was aware of its reputation to deliver superior quality combined with great customer service. Given this reputation, Apple decided to put their logo in front of the word “Music” instead of simply writing “Apple”. This logo gives the customers a safety feeling, the feeling not to take a risk by trying Apple Music but the certainty that this service will make their life easier and better. This simplicity, which is a core part of Apple’s marketing and product design, is what customers love about Apple because everyone prefers simplicity, as Ken Segall accentuates in his book (Segall, 2013, p.3/4).
“45 million songs. Zero ads.” (Apple website, n.d.) – This is the way that Apple introduces its streaming service Apple Music on their website. With this slogan, they already point out one of the main differences between Spotify and them – Apple Music is always ad-free. As many other companies, Apple offers a free three-month trial to new customers which can be cancelled anytime. “Apple Music allows you to stream our catalog of 45 million songs, along with everything in your iTunes library- no matter where it came from” (Apple website, n.d.). Herewith, Apple points out how easy and convenient it is for customers to switch to Apple Music. New customers will not only be able to access the giant music catalog Apple Music offers but will also be able to stream the songs they already had in their iTunes library- no matter where they downloaded them from. In this way, Apple triggers the customer’s mind to notice that it will not be time-consuming at all to switch to their streaming service while keeping music which is already on the phone.
Regarding the costs of the streaming service, Apple decided to give the customer three possibilities. For regular customers, they offer a membership for individuals for $9.99 per month. To cover their target group of young people, they offer a student membership for only $4.99 per month.
Finally, there is also the possibility of a family membership for $14.99 per month where you can give access up to six people. (Apple website, n.d.)
2.2 General overview of Spotify
The company Spotify which was founded in 2006 as a Swedish Start-up, has now around 70 million paying subscribers and is available in 61 countries (Statista, 2018). It is important to know that Spotify has many more users in total than the number stated above. In June 2017, there were up to 140 million recorded active Spotify users (Plaugic, 2018). The huge difference between those two numbers can be explained by looking at the two main possibilities users have while using the app. Spotify hereby uses a “freemium business model” which means that the “users can choose between two services: the free but limited service and the unlimited Premium service available by subscription only” (Bouillot, 2017, p. 110). “This two-service model is what enables Spotify to attract users who were previously used to illegally downloading music for free” (Bouillot, 2017, p. 110).
Spotify’s slogan “Music for everyone” pinpoints the first possibility – free usage (Spotify website, n.d.). Users who are not willing to pay for music streaming are still able to use the service but have to take into account that there will be short advertisement breaks between the different songs they play and the songs will not be played in high quality. In addition to that, it is not possible to do unlimited skips for songs, the songs of a playlist are automatically played in Shuffle mode (Betters and Smith, 2014). Another disadvantage compared to the paid version is that the customer cannot listen to music offline. The paying version of the service is called Spotify Premium, with which you also have the possibility to do a 30-day free trial. The offers here are similar to the ones of Apple, with a family, student and individual offer. With student memberships for $4.99 per month, you automatically get free access to the site Hulu where you can stream TV and movies live. With Spotify Premium for individuals, the user gets full access to the service for $9.99 per month (Betters and Smith, 2014).
3 SWOT Analysis
The SWOT Analysis is “a study undertaken by an organization to identify its internal strengths and weaknesses, as well as its external opportunities and threats” (Oxford Dictionaries, n.d.). The analysis consists of two main parts: “the strengths and weaknesses refer to the internals of a company”, whereas the opportunities and threats are related to the external environment in which the company operates (Economic Times, n.d.). The SWOT Analysis is used to assess a business, in addition to that it simultaneously also provides “you with a good foundation for your strategy, business proposition [and] the position of your company” (Fine, 2009, p.10).
3.1 SWOT Analysis Apple Music
First of all, it is important to keep in mind that Apple Music is a streaming service provided by the company Apple. Apple itself is a giant global player who in the fourth quarter of 2017 had a revenue of over half a billion dollars, which therewith provides its streaming service Apple Music with a big money reserve (Apple sales report, n.d.). An important strength of Apple Music is therewith the company Apple itself because it stands for quality, good customer service and has high brand awareness. Apple customers will be more willing to try Apple Music because they feel safe with the company and do not need to get out of their comfort zone. In many minds, Apple is connected with life-enriching products and unique experiences.
One of the main assets of Apple Music are the employees that embody the brand. To sell their products well, Apple needs positive, energetic employees that are happy to work at the company and embody the “Apple spirit” (S. Chazin, 2010).
Another fundamental reason for the success of Apple Music is also the big variety of around 45 million songs and the possibility to listen to them offline when downloaded beforehand and the availability of the service in more than 114 countries all over the world (Apple website, n.d.). Besides that, another important strength of Apple Music is their variety of membership plans. They have cheap propositions with advantages for students and families. As customers can share their Playlists with friends over Apple Music, it is more likely that whole friend groups will become members. An innovation of Apple Music the customers embrace is the “For you” section. In this section, Apple Music proposes new albums or song titles to the customer based on earlier downloads made.
To understand how Apple Music reaches such a big group of possible new customers, it is indispensable to take a closer look at the collaborations they have with other companies. They have collaborations with big firms like musical.ly and Telekom Germany. When someone is buying a phone at a Telekom store or online, he automatically gets a free 6-month trial for Apple Music, regardless of the brand of the phone bought (Rys, 2017). This enables Apple to reach customers from competing brands like Samsung or Windows. The advantage of Apple having its own smartphones is that the “Apple Music” app is already preinstalled before the purchase and cannot be deleted. In this way, the Apple smartphone users are always confronted with the advantages they could have using Apple Music and how easy it would make it for them to access new music at any time.
When seeing all these advantages, it is important as a company to also be aware of its own weaknesses. As some people completely reject the idea of using an Apple device and distance themselves from the brand, the direct connection to the brand Apple is the first weakness that Apple Music has. Compared to competitors, Apple Music does not offer a free version of the music streaming service, which might be a negative point for some consumers, even though Apple Music does offer a free trial.
Regardless of their strengths, Apple Music does also have some opportunities which might be worth considering. One of them might be to grow its market share, especially in countries with low competition, the ones where they are the single provider of music streaming. Apple Music could also make more use of the company behind its service, Apple. The smartphone producing giant could effectively use its own product line of iPhones to incorporate an automatic Apple Music membership. An example could be that with every iPhone of a new generation bought, the client gets an automatic membership for a year for free, which could also influence customer’s decisions of buying an iPhone (The Music Report, 2016).
Nevertheless, the company is also facing some threats from its external environment. One of the biggest competitors Spotify is becoming more and more popular, the number of their paying subscribers keeps growing steadily from month to month (Statista, 2018). Moreover, other big companies like Amazon start offering their own music streaming services with “Amazon music unlimited”. An imminent threat for the whole music streaming industry is still music piracy, even though higher punishments were introduced in the past years.
3.1 SWOT Analysis Spotify
One of the big advantages Spotify has over its competitors is their market share. They are winning over most clients with their streaming service and therewith attaining the highest market share in the industry. This can be explained by them being one of the first ones in the market, they had a head start with gaining trust to get the customer satisfied and loyal. In addition to that, they are giving customers the possibility to use the site for free, even though the access to some songs and features is restricted. What users value aside from that, is the easy usage of the app with a clear design and user-friendly interface. Besides that, people can easily connect to their friends over Spotify, create and share Playlists from the wide range of 30 million songs available. The “Discover Weekly” section which is added to the user’s feed every Monday morning contains a two-hour playlist of personalized music recommendations based on […] listening habits” (Hall, 2018).
Past collaborations with big companies like Starbucks for a good cause or an even bigger collaboration with Uber were reasons why Spotify became a strong streaming service for upcoming competitors right from the start. Their newest collaboration with Maggie Lindemann and Pat McGrath started in November 2017. The famous make-up artist and American singer and songwriter Maggie Lindemann released a make-up collection which was sold over the singer’s artist page on Spotify. This was the first time that Spotify sold other products than standard merchandise like posters through its Merchbar platform (Ong, 2017).
Even though Spotify is the successful market leader right now, it still has a major weakness. As a result of providing the service for free, the artists get quite a low amount of money, according to the book “Spotify: Music For Everyone: The meteoric rise of the world’s top streaming service” the average artists’ share per single streamed for free online is about 0.0001 Euros (Bouillot, 2017, p. 193). In some cases, this underpayment already lead to the limitation of the music library for users because some artists decided to take down their songs. Taylor Swift or Adele for instance withheld new releases from Spotify in the past because the company first “refused to restrict the access [of their albums] to paying subscribers only” (Sherwin, 2015).
As every company, Spotify has some opportunities it could take to improve even more. To underline its exclusivity, they could offer more content, like live band interviews that only Spotify users would be able to access. As Spotify was basically a first-mover, it has the opportunity to make the service even more competitive by making better offers to artists to prevent them from swapping to the platform that offers most (Pointon, 2017).
As competitors never rest, it is important to keep an eye on the threats that oppose the company. Apple Music gains ground on Spotify every month due to exclusives and good collaborations, whereas Spotify has the problem mentioned above of artists leaving. An imminent threat to the music industry at any time is still the piracy of songs with illegal downloading which steals millions of dollars from music companies (Pointon, 2017).
As the findings show, Apple Music and Spotify are both equivalent competitors that influence the music streaming industry. The major difference is the concept behind these two services. Apple Music relies on its famous company name to attract clients, whereas Spotify had to take a greater risk right from the beginning as an early adopter and was therefore revolutionary in the streaming business.
Not to be forgotten is that, compared to Apple Music, Spotify offers a free version for its customers which makes it more attractive for the average consumer which does not download many songs or listen much to music. On the other hand, Apple Music users automatically have access to all features and around 15 million more songs when subscribing.
An advantage that Spotify has over Apple Music is that they have their own Merchbar platform which enables even more possibilities when collaborating with firms or certain artists. With collaborations like the one with Maggie Lindemann they can offer the customer a product range that exceeds the streaming of music and therewith connects it to other markets. What on the other hand could be a problem for Spotify in the future is them not being able to keep the artists, regularly having problems with Albums not being provided over Spotify because of unsatisfied artists. On the other hand, Apple Music gains ground more and more every year and offers attractive collaborations like the one with Telekom where they explicitly target smartphone users from other brands than Apple to create a larger pool of potential customers.
As one can notice, Apple Music and Spotify are not that different in many points. Apple Music and Spotify both offer the customer the possibility to download music and listen to it offline, even though Spotify provides this feature only to premium users. Both streaming services paying memberships are prized the same way, regardless of the type of membership. They are connected to Social Media, allowing users to share their playlists with friends. Despite their different names, the “Discover Weekly” and “For You” section of the two services are basically almost the same – they provide the customer with new music recommendations according to his downloading habits.
To put it all in a nutshell it is safe to say that both companies offer the customer a unique experience when streaming music with their service and none of them can be clearly medaled as the winner. Both companies will keep developing further in the future and it will become increasingly important who contracts the best collaborations with the most attractive firms and artists to increase the market share.
From my personal point of view, Apple Music is the clear winner. As an Apple user, having all my songs on all my devices directly without needing to open the browser to listen to songs is what works out best for me. What I also value is the easy user interface, the great variety of songs and the algorithm that proposes me new songs regularly that nearly always fit my taste. All in all, it is safe to say that as an Apple MacBook and iPhone user I never once regretted choosing Apple Music and the simplicity and functionality of Apple Music in combination with my other Apple products make the experience easy and life-enriching every day.
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