Apple is Missing the Boat with Music Streaming from the Cloud
News early this morning suggests that Apple's recently acquired Lala team (the former music streaming service) may be hard at work on streaming video as opposed to music from the cloud.
Apple is missing the boat.
A wave is fast approaching in the online music industry, and Apple is showing no signs of acknowledging it any time soon. That wave, of course, is streaming music--free music--via the cloud.
It's a relatively new concept pioneered by companies like Lala (no longer in service after their acquisition by Apple), Grooveshark, and Spotify (still not yet available in the U.S.). These services allow users to sign up for a free account, download or use the online streaming interface, type in a song they want to hear, and get listening immediately. No delay, no limit to the songs available, and with ever-burgeoning catalogs to choose from. Grooveshark even allows users to upload their own music to their servers, further growing the selection for users.
The best part about these services? They're making money. Spotify and Grooveshark both have paid versions of their software that gives paying users more advanced features and removes ads from the stream of music. Is it as much money as Apple is making with iTunes? Of course not, but that revenue from iTunes is increasingly coming from sales of iPhone, iPod Touch, and iPad apps, and less so from music.
Apple could turn this around by releasing a premium streaming service that's vastly superior to Spotify and Grooveshark, based right inside iTunes. A subscription model of even $10 a month would convince many users to sign up immediately, and their catalog would be unmatched. But, of course, this doesn't appear to be their strategy just yet.
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