Why Did Apple Approve Spotify?

from the not-that-tough-to-figure-out dept

Tue, Sep 22nd 2009 10:34pm — Mike Masnick

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.

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Filed Under: music
Companies: apple, google, spotify

16 Comments

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Frosty840, 23 Sep 2009 @ 12:31am

I agree with you, Mike (apart from any sentiment you expressed that implied that Apple software isn't utterly horrible to use, at any rate), and I find it knd of sad that there are people out there these days who have no concept of a loss-leader, and have a fixation that every part of every aspect of a business has to make money, rather than concentrating on the profitability of a company as a whole.
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Sardar Mohkim Khan, 23 Sep 2009 @ 12:56am

@Spotify
I agree with that.. but don't you think that would be too un-Apple-ish? What appears more probable is an acquisition at some later stage
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Tor (profile), 23 Sep 2009 @ 1:01am

With Spotify having licensing deals for streaming with and being partly owned by the major record companies, could there be some licensing trouble for Apple if it wants to enter the streaming market?
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anon, a mouse cowered, 23 Sep 2009 @ 2:12am

no background running
Main killer is that with multi-tasking limitations, Apple do not allow apps to run as a background process - so no listening to Spotify while doing much else...
But their own music playing functionality DOES run in the background - which will be a killer advantage when they implement "Spotify style" iTunes functionality: As having your music play while you do something else is a big bonus....
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Anonymous Coward, 23 Sep 2009 @ 4:51am

Spotify is already not-so-interesting...
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R. Miles (profile), 23 Sep 2009 @ 5:04am

Re:
...there are people out there these days who have no concept of a loss-leader...
That's because some of these people, including myself, knows that iTunes isn't a loss-leader.

Especially when Apple makes over $0.50 per transaction of every song purchased. Where's the "loss" in this?

The only "loss" Apple suffered with iTunes is when RIAA demanded $0.30 more per song, driving consumers away to those sites still offering the same for $1.

I see nothing as a loss-leader when the product is stamped with the Apple logo, whether it be software or hardware.

So, on topic, the *ONLY* reason Apple is allowing Spotify is due to the FCC of late and Apple simply wants to look good on paper.

But you can bet those in charge are fuming at having to do so.
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Nick Coghlan, 23 Sep 2009 @ 5:36am

iPhone music player UI is horrible
Tiny little buttons for half the controls, artist, title and album displayed in fonts you can't read from more than a foot or two away and most of the screen real estate wasted trying to display CD album art I usually don't have (because I rip my own CDs and iTunes is useless at finding album art if your name for the CD differs even slightly from what it is called in the iTunes store, if it is there at all. AmaroK isn't any better.).

It's just better than the other options that are out there and means I have music with me to play in the car without having to carry any electronic gadget other than my phone.
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Anonymous Coward, 23 Sep 2009 @ 5:37am

speculation much
if this is the kind of formulaic blog post that will be replacing the newspapers, count me out.
* don't seek for comment any of the parties you're talking about
* crosslink at least 3 times for every outlink
* use lists at every chance you get
* use wishy-washy indefinite language like "appears" and "probably" and "i would bet" and "i would be surprised"
* use a cookie cutter title ("x reasons why ...", "why ... ?" or "top x best ...")
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Simone Thevenot, 23 Sep 2009 @ 6:31am

Or...
A daring alternative view would be to simply take Apple at their word. Anyone who knows Steve Jobs personally could easily believe that in the end it's all about user experience. Apple say that's the test and I have no reason to doubt them. As financially successful as they've been, they're still a creative-driven company.
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Simone Thevenot, 23 Sep 2009 @ 6:32am

Or...
A daring alternative view would be to simply take Apple at their word. Anyone who knows Steve Jobs personally could easily believe that in the end it's all about user experience. Apple say that's the test and I have no reason to doubt them. As financially successful as they've been, they're still a creative-driven company.
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Javarod (profile), 23 Sep 2009 @ 6:43am

Hmmm, one reason Apple may have approved this is to get a free guinea pig. Apple has stayed away from the subscription model on the basis that its a poor deal for the consumer, and most consumers don't want it. How better to find out if you're right, then to allow someone else to prove it? Apple should they choose to can beat Spotify at their game, but doing it this way allows Spotify to take all the risks first.
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Jim J (profile), 23 Sep 2009 @ 8:35am

Or maybe they just aren't at all afraid of Spotify
I am pretty sure Steve Jobs has went on the record as saying something to the effect of "Streaming music services will never be something the general public cares about."

Granted, his/Apple's position could have changed on that but maybe they just don't see any threat from these streaming apps, are not working on a competitor to it, and didn't block is because they aren't afraid of it.

All speculation of course...
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Jim J (profile), 23 Sep 2009 @ 8:36am

Re: speculation much
And yet, here you are trying to generate some discussion on what's wrong with the format. Isn't it great that you potentially have a voice in it instead of being fed the content in a way you have no control over besides consume or not-consume?
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Mike Masnick (profile), 23 Sep 2009 @ 10:40am

Re: speculation much
if this is the kind of formulaic blog post that will be replacing the newspapers, count me out.

It's not. We're not trying to replace newspapers. We don't do reporting, we do commentary. And have for over a decade. We are who we are, not who you expect us to be.

* don't seek for comment any of the parties you're talking about

Do you seek comment from the parties you're talking about before every conversation you hold? Obviously not. You did not seek comment from us before posting your misinformed comment about what you think we are.

crosslink at least 3 times for every outlink

Again, we've been at this for over a decade. One thing we do, in order to keep blog posts short is to back link to earlier stories for context. Why is this a problem?

use lists at every chance you get

We almost never use lists. Every once in a while they make sense. In this case, they made sense.

use wishy-washy indefinite language like "appears" and "probably" and "i would bet" and "i would be surprised"

This is an opinion site, where I am presenting my opinion.

use a cookie cutter title ("x reasons why ...", "why ... ?" or "top x best ...")

Uh, we never do that. But thanks for playing.

Thanks for visiting. Next time, perhaps, ask for comment before you spout off nonsense.
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Anders D, 24 Sep 2009 @ 1:42am

Itunes VS Spotify
Don't you forget that iTunes is the worst thing that has happened to the music industry?
That is why everybody is happy with Spotify. Record industry and the artist earn far more from Spotify, than from itunes.
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David, 27 Sep 2009 @ 2:54am

Re: Itunes VS Spotify
That is actually not correct. I run a business that puts music on itunes and Spotify. Itunes pays more than Spotify period. 50K listens on SPotify could easily pay only a few dollars, but one sale on iTunes pays 0.7 Dollars.
That the way it is
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