The Wall Street Journal this week reported that Apple has reached agreement to stream yet another chunk of global music, the entire catalog of Warner Music Group, ahead of its widely expected launch into a streaming music service. The accepted wisdom is that this will be more like Pandora, and carry advertising and be free, but also come in a paid version, so will also hit directly at the heart of Spotify as well.
Let’s be clear about this, in years gone by, when Microsoft placed new services (like Internet Explorer) on its Windows home screen , and charged little or ,better still, nothing, for them, then because of the widespread usage of Windows this meant it was going to annex something close to a monopoly. So the only thing that is going to prevent Apple killing off Pandora and Spotify with its new iRadio, is the fact that the service is unlikely to ever be launched on rival platforms like Android and Windows 8. But given the importance of music to the Apple franchise, that is by no means an certainty.
The Wall Street Journal reckons that Apple paid through the nose for these last rights, offering Warner 10% of all the advertising revenue, more than Warner gets from Pandora. Apple already has others deals in its pocket, notably from the largest music group in the world Universal Music Group, owned by French Group Vivendi.
Google and Microsoft have already unveiled streaming music services and another is expected from Amazon, as well as one called Rdio from the founders of Skype, Niklas Zennstr’m and Janus Friis.
This is the first time that Apple has arrived late at a party, but expect it to dominate. It has access directly to 100s of millions of devices, and can make offers to their owners directly, for new services. But what kind of impact will this have on iTunes revenues ‘ we’ll have to wait a few quarters for that, but we think it will be negative.