Apple "iRadio" Streaming Music Service Will Drive Music Sales AND Limit LTE Usage

As I was writing yesterday's post on what we've learned about Apple's rumored music streaming service, a few conclusions jumped out at me:

1. While most streaming services have a neutral or negative effect on music sales, Apple iRadio will actively increase sales; and

2. While most streaming services are bandwidth hogs, Apple iRadio will be materially easier on your mobile data plan - and will use less of your data cap the more you purchase music. 

Here's why.

Keep in mind, all of this is speculation. But it's informed speculation, based on available facts, and rather obvious inferences.

Apple iRadio will Increase Music Sales.
  • Integrated Music Store = No friction between "purchase idea" and music sale 

Some streaming services provide links for song purchasing. Pandora, for instance, provides links to iTunes and to Amazon's music store - we could, presumably, purchase a song if we liked it. 

But clicking that link that takes some amount of effort. You're going to have to open a different browser tab - or another application, if you're using iTunes - enter your userID and password, and so on. 

Every one of those actions represents a roadblock between a partially motivated customer and a sale. That kind of friction results in fewer sales. 

Really, these streaming services drive sales in the same way radio airplay does. It puts the idea for a music sale in the user's head, but still requires some follow-up work from the listener. It requires some additional investment of time and energy. 

Apple iRadio won't require that effort. There will be no "friction" between hearing a song you'd like to buy, and actually buying that song. 

You'll be in the iRadio application, and at all times, you'll see the artist and song name, the album cover, and a big green "buy" button onscreen. 

Clicking the button won't open another application, and won't stop your music. It will simply start the song downloading to your iTunes library (and iCloud account) in the background. 

Absolutely no effort required. 

  • Apple Genius Data = Better matches between listeners and potential music purchases

For better or worse, we've turned a lot of our private information over to corporations in the last 10 years. 

At this point, Facebook knows more about me than my best friends do... Netflix knows what kind of movies and TV I like, and Apple has a pretty good idea about what kind of music I listen to and buy.  

Apple will almost definitely use their vast repertoire of Genius data to keep feeding their iRadio listeners songs that "fit their profile" - songs that are similar to songs they've purchased in the past. 

When you consider these two bullet points, it's easy to understand why Apple thinks they should be paying substantially less per streamed song than Spotify, iHeartRadio, or even Pandora. 

Apple iRadio will - in a very literal sense - be "advertising" specific songs to precisely the people most likely to buy them. 

It's practically payola. Except that the labels will be getting paid for it. 

  • Apple iRadio will not allow users to directly choose songs to be streamed

But why would I *buy* the song? I'm listening to a free streaming service! Why not just wait for it to come up on iRadio again? 

That's the issue - you don't know when that song will come up again. It may be a while. 

Within the iRadio app, you won't have Spotify-level control regarding which song will be played next. You don't get to "have it your way" - you listen to Apple's iRadio playlist. 

A playlist which, admittedly, is specially Genius-designed for your specific tastes in music. 

But you won't be able to listen to one particular song - unless, of course, you've purchased it. 

iRadio will always make the songs in your iTunes in the Cloud account available on-demand. 

So if you're listening to iRadio, and a song comes along that you dislike, you'll be able to "bump" it and select any song from your library. And when that's done, it's right back to iRadio's playlist. 

Which leads to our second point:

Apple iRadio will Limit LTE Data Use.

A few months ago, I finally abandoned my AT&T unlimited data plan, so that I could move to Verizon. (AT&T's dropped call rate was approaching 100%. Literally every call was dropped, or affected so the person I was speaking to couldn't hear me.) 

I have to imagine that this is a pretty common fact pattern, and the number of "unlimited" data plan owners is dwindling over time. 

So for most of us, the idea of Apple iRadio (or any music streaming service) is that it will be limited to our home internet, or that we'll have to watch our LTE data like a hawk.

And in most cases, that's true. 

But when using Apple's iRadio on an iPhone, we will at least have the opportunity to mix in some locally stored music. Locally stored songs which will require zero data to play - after the original download, which can be configured for wifi-only.

In fact, this "music purchases = less LTE use" phenomenon is another factor that will drive music sales through iRadio. 

Ultimately, Apple iRadio provides an absolutely compelling value proposition for both the record labels and for Apple. 

iRadio has the potential to be a win-win-win - increased music sales for Apple, new streaming revenues AND more music sales for the labels, and a wider variety of free music for listeners.  

Let's hope they get the deal done quickly. 


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