This paper is about Apple Music, the streaming music service developed by Apple, and its significant challenges and opportunities within the streaming music industry.
The object of this paper is to provide a detailed analysis of the industry in which Apple Music operates, what resources and capabilities the company has, and what strategic choices it has already taken. The final part of the paper will discuss potential strategic development that should occur within the company in order to increase the value of the service, its market share, and ultimately Apple’s bottom line.
Apple Music was announced on the 8th of June 2015 and was available to weeks after the announcement. It offers unlimited streaming music and videos for $9,99 per month for individual membership, $14,99 for family membership, and $5,99 for students. The choice of this company is due to the rate streaming music industry is growing, because of its high level of competition and because of the amount of importance the service has for the whole Apple ecosystem.
Table of Contents
Introduction
1. Industry
2. Competition
3. Porter’s Five Forces
3.1 Threat of New Entrants
3.2 Bargaining Power of Suppliers
3.3 Bargaining Power of Customers
3.4 Threat of Substitute
3.5 Competition within an industry
4. Current Strategy Analysis
5. Future Strategic Developments
Objectives & Core Topics
This paper examines Apple Music's position within the streaming music industry, focusing on the competitive challenges and strategic opportunities it faces. It aims to analyze the company's existing resources and strategic choices while proposing future developments to enhance market share and profitability.
- Streaming music industry market analysis
- Competitive landscape assessment (Spotify, YouTube, Pandora)
- Porter's Five Forces application to Apple Music
- Strategic analysis of Beats Electronics acquisition
- Future strategic recommendations including hardware integration and pricing strategy
Excerpt from the Book
Current Strategy Analysis
Apple Music strategic choices are directed toward penetrating the market to place the company’s service ahead of its competitors. The type of service it currently offers comprises a single monthly subscription for $9.99 and a family package for $14.99. Just like its main competitor, Spotify, Apple Music provides a discount of 50% for any student enrolled in college or university.
From the acquisition of Beats Electronics for $3 Billion in 2014, the service is now offering a 24/7 global radio service called Beats 1, which is now on its way to become the largest radio station in the world. Apple decision to acquire Beats has been crucial for several reasons. Firstly Beats operates successfully in the headphones industry, which is a fast growing market. Secondly, they have a great brand image. Apple’s goal is to use Beats capabilities to better penetrate the market and increase the popularity of Apple Music. According to Tim Cook, Jimmy Iovine (co-founder of Beats), will contribute to the service with his in-depth knowledge of the music industry, while Dre by establishing relationships with artists. (D'Onfro, 2014)
Another significant contribution by Beats to Apple Music was to start using human curation for playlists instead of algorithms. This factor has been the main advantage of Spotify since it proved that the type of songs sequences affects how you perceive music experience.
Summary of Chapters
Introduction: Provides an overview of the streaming music industry and defines the scope of the analysis regarding Apple Music's strategic position.
1. Industry: Discusses the rapid growth of the streaming music market and the changing revenue landscape compared to traditional digital downloads.
2. Competition: Analyzes the competitive landscape, specifically the dichotomy between free and paid streaming services and the market shares of key players.
3. Porter’s Five Forces: Applies a classic strategic framework to evaluate Apple Music's competitive environment and internal challenges like churn rates.
4. Current Strategy Analysis: Reviews existing strategic decisions, including the acquisition of Beats Electronics and the shift towards human curation.
5. Future Strategic Developments: Recommends future actions focused on iOS ecosystem integration, pricing perception, and hardware-software synergy.
Keywords
Apple Music, Music Streaming, Spotify, Beats Electronics, Market Share, Subscription Model, Porter's Five Forces, Hardware Integration, Digital Music, Human Curation, Strategic Development, iOS, Industry Analysis, Competition, Royalties
Frequently Asked Questions
What is the primary focus of this paper?
The paper examines the current strategic position of Apple Music within the competitive music streaming industry and provides recommendations for future growth.
What are the central themes discussed in this analysis?
The core themes include competitive market dynamics, strategic branding, the impact of the Beats acquisition, and the integration of hardware and software services.
What is the main objective of the research?
The goal is to analyze the resources, capabilities, and market choices of Apple Music to determine how it can improve its market share and financial performance.
Which scientific framework is used to evaluate the industry?
The authors employ Porter’s Five Forces model to assess the competitive intensity and the power dynamics within the streaming music sector.
What does the main body of the work cover?
The main body covers a market industry overview, competitor analysis, a strategic audit of Apple's current approach, and specific proposals for future strategic shifts.
Which key terms characterize this analysis?
Key terms include streaming music, subscription models, market penetration, churn rate, ecosystem integration, and competitive advantage.
Why is the acquisition of Beats Electronics considered critical?
It provided Apple with a 24/7 global radio station (Beats 1), improved brand image, and introduced human curation, which differentiates the service from algorithm-only platforms.
How does Apple Music's churn rate compare to Spotify?
The paper notes that Apple Music faces a churn rate of 6.4 percent, which is three times higher than Spotify’s 2.4 percent.
What role does iOS play in Apple Music's strategy?
The "power of default" on iOS is identified as Apple Music's biggest advantage, acting as a significant barrier to entry for competitors.
What final recommendation does the paper suggest for hardware?
The paper proposes deeper integration between music streaming and existing hardware like iWatch and Beats headphones to create a more personalized and emotionally engaging user experience.
- Quote paper
- Mario Terrigno (Author), Mattias Eliasson (Author), André C. Kohl (Author), 2016, Apple Music Report. An underperforming Giant, Munich, GRIN Verlag, https://www.grin.com/document/351754
