Apple’s iCloud and What It Means to the Digital Music Market

Today Apple formally launched iCloud.  Back in June when Apple first announced iCloud I said I considered it a great start but just that.  After today’s announcement I’ll add that there is more meat on the bones but that Apple has still fallen short of its potential here.  Don’t get me wrong, iCloud and iTunes Match are great, elegantly implemented services.  But I still think Apple could have done more, much more.

A few months ago I wrote that Apple, Amazon and Android comprised Digital Music’s Triple A and that they all shared SPACE, that is Scale, Product, Ambition, Cash and Ecosystem.  This framework provides a useful lens with which to view Apple’s music related announcements today:

  • Scale.  Apple is a truly global company with global reach.  Any service it launches needs to share as much of that reach as possible to deliver the benefit to device sales it exists for.  So it was a disappointment that Apple didn’t announce an international rollout for iCloud at launch (international markets will come later).  Launching in the UK will be crucial for Apple and will be where they can steal a march over the rest of the Tripple A. It is the most advanced digital market in Europe and Apple’s biggest market too.  Android and Amazon won’t find it so easy brining their locker services to the UK as Apple will though.  The UK does not yet have fair use legislation so the other 2 A’s (unlicensed) locker services that depend upon DMCA provisioned fair-use would not be legal in the UK.
  • Product. Most of the attention is around the iPhone 4S and new iPods.  They are of course what Apple is all about. The seamless integration of iCloud significantly enhances the value proposition of these products.  We are in an age where consumer devices are defined by their surrounding ecosystem as much as by the hardware itself (see my Socially Integrated Web post for more on this). iCloud takes the Apple ecosystem to the next level. I’d still like to have seen better productizing of it though, such as pre-installed device bundles with a year of iCloud included as a standard pricing option alongside harddrive capacity.
  • Ambition.  Here is where Apple fell a little short from a music perspective.  I’ve sensed a steady weakening of Apple’s music strategy ambition over the last few years and today’s announcements fit the trend.  It makes absolute sense of course.  When Apple first launched the iPod, music was the killer app for the small memory monochrome screen device.  In the days of the iPad, music just doesn’t show off the capabilities of the device like video, books and games do (regardless of whether that is the main activity people conduct on iPads or not).  iTunes has been hugely successful (16 billion downloads to date and 70%+ market share).  But Apple’s music strategy and consumer offering hasn’t changed dramatically since launching in 2003.  There have been some great evolutions (more catalogue – 20 million tracks, DRM-free, better editorial and programming etc) and some half hearted innovations (Ping, Genius) but it remains fundamentally the same product it was 8 years ago. Compare that to the evolution of the iPod.
  • Cash.  Apples’ great advantage in digital music is that it can afford to loss lead if it so wishes as music is all about selling i-devices not direct revenue for them.  Yet Apple is ideologically a margin company and this is why they don’t ‘do a Kindle Fire’ and build a killer music subscription offering because they calculate they can get better ROI from more modest music innovation.
  • Ecosystem.  Apple have just put clear blue water between their music ecosystem and those of the other 2 A’s of Digital Music.  The elephant in the room though is the new ecosystem in town: Facebook.  Apple was glaringly absent from the F8 announcements and there is no space for Facebook here.  Apple’s ecosystem is defined by devices, Facebook’s by user data and user convenuience.  Apple and Facebook will start banging into each other (see figure) and sooner or later the pair will start needing to build co-existence strategies.  In the meantime expect Android Music to start building strong links with Facebook.

So in conclusion,  I walked away from the Apple event with the familiar feeling that I wish there had been more.  But like I say, it is a familiar feeling.  I suspect that the music industry has missed its window of opportunity with Apple to drive truly transformational music industry innovation.  Maybe now they’ll start to regret having played hard ball with Apple in days gone by and start looking for someone else to pick up the baton.  They may be looking for some time.

About these ads

2 thoughts on “Apple’s iCloud and What It Means to the Digital Music Market

  1. Pingback: Music Biz Buzz – Oct. 5th 2011 | AUDIOCOMPULSIVE

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s