Nearly two years after paying $3 billion (£1.9bn) for the Beats headphone-making and music-streaming company owned by Dr Dre and Jimmy Iovine, Apple is preparing to take the covers off its Spotify rival.
Late to the music-streaming game after Steve Jobs chose to instead focus Apple's efforts on selling content through iTunes, the iPhone maker is just weeks away from taking on Spotify, YouTube and Rdio. The streaming service is expected to launch at the company's Worldwide Developer Conference (WWDC) on 8 June, but as with all new Apple products, plenty of information has leaked out.
What will it be?
Put as simply as possible, Apple's new service will stream music tracks to the iPhone, iPad and Mac. The service will reportedly be integrated with the current iOS Music app and iTunes for Mac. Apple will also make it available through its first-ever Android application, for which it has been hiring developers this year. However, insiders claim this app has been delayed, and so may not arrive in time for the service's initial launch, tipped for 8 June.
How will it be sold?
Apple is looking to push its music streaming service as a subscription-based product with a monthly fee. According to reports from insiders, it seems uninterested in offering a free service supported by advertisements, like Spotify, and will instead offer a free trial period of between one and three months.
Recode reports: "In private meetings with label executives and other music industry figures, Apple has been arguing that free streaming won't generate enough money for the industry via advertising, and doesn't give people incentive to pay for subscriptions."
The length of Apple's proposed trial period will depend on the result of ongoing talks between Apple and record labels ‒ a theme that has been a constant headache for Apple over the past 12 months.
Before signing up to pay, Apple is hoping to offer customers free access to a sample selection of songs, but this will also depend on striking deals with the labels.
According to the often well-informed 9to5Mac, Apple will charge $7.99 per month for the streaming service, less than the $9.99 charged monthly by Spotify, Rdio and Beats Music (before Apple bought it last year). UK prices aren't yet known, but if Apple undercuts Spotify in the US, we hope it'll do the same here, and that would mean coming in below the £10 per month barrier.
An amateur DJ platform
The streaming service, which doesn't yet have an official name, will include a feature where users can operate their own online radio stations. It is understood this will let users subscribe and listen to the music feeds created by others. This is where Apple's hiring of BBC Radio 1 DJ Dane Lowe earlier in 2015 ‒ plus four top producers from the same national UK station ‒ begins to make sense.
Competition commissions keep a watchful eye
Adding music streaming to iTunes seems like an obvious move for any successful digital music retailer, but Apple's dominant position in the market is subject to investigation. Buying Beats and talking with record labels has triggered preliminary investigations by the European Commission and the Federal Trade Commission in the US. Each body will be looking at whether Apple is using its position as the world's largest digital music seller to put rivals like Spotify at a disadvantage. Apple's iTunes Store has around 800 million registered users. Spotify has 60 million active users, of which around 15 million pay for the service.
Their investigations aren't without good reason. Apple has been pushing major music labels to force services like Spotify to stop offering music for free, sources have told The Verge, dramatically reducing Apple's competition. If this were to happen, Apple will be ready to pounce on users defecting from Spotify in favour of a free alternative, even if the iPhone maker can only offer them a limited trial. Apple is also widely expected to offer a large amount of exclusive content, further sweetening the deal.
But Apple will need to tread carefully. The company is already on the naughty step after being found guilty by the US Department of Justice of conspiring to raise the price of ebooks; Apple was fined $450m (£290.6m) and is appealing the verdict, but as a result an antitrust monitor is on its California campus to keep an eye on its actions. The New York Post claims Apple is being probed by the EU Competition Commission over whether it is working with record labels to end free streaming services like Spotify and YouTube.