Here’s a cute anomaly from Apple’s $3 billion Beats acquisition:
When recent reports suggested Apple was considering bringing iTunes to Android to help boost flagging music sales, skeptics scoffed at the thought of the iPhone maker supporting a competing platform. But with its $3 billion purchase of Beats, Apple has now revealed it plans to keep the Beats Music subscription apps alive not only on Google’s Android, but also Microsoft’s Windows Phone.
So for the first time ever, there’s a semi-official Apple app available for competing platforms — and Apple plans to keep it that way.
This goes a long way towards showing how completely streaming music is changing market conditions, even for hardware vendors like Apple. Previously the company had been happy to run the iTunes Store as a low-margin service to help sell their high-margin hardware. Last year Apple introduced iTunes Radio, its own streaming service, but didn’t manage to put much of a dent in Spotify’s dominance. And for branding reasons if for no other, it’s difficult to imagine Apple making iTunes Radio available for anything but iDevices.
Meanwhile, music sales are declining globally — even at the iTunes Store — as streaming services (particularly Pandora) grow and grow.
Beats’ paid streaming membership is small, but the company has shown a knack for converting a high proportion of free-to-listen members to the paid model. Not bad for a still-new service. Going forward, owning Beats– and especially the talents of Jimmy Iovine and Dr. Dre — might help shore up Apple’s music sales.
But music sales are such a vanishingly small portion of Apple’s profits, that you have to wonder if $3 billion isn’t an awful lot of money for what looks like a purely defensive acquisition. And that would be a strange move for a company whose history of acquisitions has been to buy small firms with interesting technology Apple wants to lock up for its own uses.
That’s why I get the feeling that for all of Wednesday’s gushing over the deal, it will be quite some time before we really know what Cook & Co have up their sleeves.