A number of articles (see this WSJ piece) have commented on the hard sell that awaits Apple Music in Asia, following the disclosure of details on the highly anticipated music streaming service. According to the PR, the service will be available in over 100 countries starting on June 30, however Chinese sources report that this excludes China for now. Nevertheless it’s interesting to look at the challenges and obstacles that will have to be overcome should the new streaming service roll out here.
There are a multitude of approaches Apple could take to carve out some market share here, but we would argue that of all the advice that the analysts have pitched in, competing on pricing points is perhaps the most misguided suggestion. Apple Music’s offering needs to do two things: build value by offering something truly compelling, and perhaps most importantly, find a way to build perceptions of value in music (if this is even possible). Interestingly, a number of articles on Tencent’s strategy for converting users to paid ‘Green Diamond’ subscribers appeared around the same time as the media groundswell around Apple’s announcements (here and here).
If there’s a business that can build perceptions of value, it’s Apple. How much does it cost to manufacture and distribute an iPhone? Nothing close to the 6000元 price tag. So why do people buy iPhones? Because Apple is a luxury brand. Look at how they’re pushing the Apple Watch. With Apple Music, if the pricing point is going to be relatively higher in Asia, this arrangement only plays into the same schema of messaging they’ve set up around the tech they’re shifting. But here’s the crux of the issue – moneyed people don’t necessarily want to pay for music either, because unlike a physical commodity, having a mobile subscription doesn’t exteriorize itself into a status symbol.
So what else is Apple Music going to bring to the table? Tencent and Xiami have loyal user bases. These are people who have curated their own playlists, and have embedded their music listening habits into their social networks (which is why WeChat blocking Xiami users from sharing songs to their Moments feed was a big deal). QQ Music alongside a host of other apps are available in-car, and QQ’s paid-tier benefits feed in to a host of other services including online gaming, tying the prospect of paying extra for music into a wider ecosystem of media content. Apple can play the same game, but how are they going to motivate people to make the switch? Is brand loyalty enough?
Apple has immediate access to a mass audience, and has the budget to iterate until it gets things right. Is Apple Music worth the investment? Will it be profitable? We’re not too fussed about these questions. What really matters is this: if Apple Music launches in China, will this pressurise unlicensed services operating at the fringe? They’ll lose Apple fans, but there’s still a sizeable group of budget smart phone users that will sniff at a subscription service. Will it encourage other competitors to improve their paid offerings? We’ll have to wait and see. This is just a ‘food for thought’ piece. We have no answers, and wouldn’t dare to offer suggestions. From our side, we’re just happy to consider the possibility that another legit player may enter the market.
UPDATE:
China has been snubbed, while HK gets access at a lower pricing point (USD6.2).