Millennials Won’t Pay for Apple Music

Apple officially launched its new music streaming service Tuesday with a money-based subscription that may scare off a vital 62 million-person market: millennials.

Yuya Shino/Reuters

This afternoon Apple Music launched as part of the company’s latest move to become the dominant player in a fierce game that’s shaping up to be an all out streaming music war.

The stakes are high. According to the International Federation of the Phonographic Industry (IPFI) the global music organization’s value now surpasses $1.5 billion—with a year-over-year growth of 51.3 percent. Can Apple, with this latest play, actually dominate and win the consumers’ heart, particularly that of millennials?

Many music-tech experts are comparing this new streaming music service to a Spotify-meets-Pandora scenario. The new subscription service offers on-demand access to the iTunes music library for $9.99 a month (and a free three-month trial period). With a paid subscription (either the $9.99 for single users or $14.99 for up to six people on one plan), customers can stream the entire iTunes catalog, create playlists, and save it all.

Additional features include Beats 1 Radio, a 24/7 radio station hosted by three prominent DJs in the music business hailing from London, New York, and Los Angeles. The final addition, Connect, is a social media platform designed to help fans engage at a deeper level with artists through exclusive video, photo, and songs—a service kicked off by recording artist Drake.

The streaming options now in place (like Spotify and Rdio) use algorithms to help users discover and enjoy streaming music. Apple says it has a new differentiator—deciding to go old school and actually add human music “experts” to help customers create an even more customized experience.

It’s this human touch that Apple hopes will be its silver bullet. Whether it’s something that market was missing or not remains to be seen.

Tim Westergren, founder of Pandora, told the Daily Beast that Apple’s re-entry into the market is proof of its power. “Apple’s investment in music streaming simply reinforces our long-held belief that there is healthy consumer demand for these types of services.” But Westergren, who boasts a “strong connection” to an 80 million-person fan base, seems confident Pandora will continue to thrive. “Delivering a great personalized listening experience is fantastically hard to do but we believe we’ve cracked the code,” said Westergren. “We leverage our Music Genome Project, 15 years of data, and the expertise of our curators to deliver the exact right song at the exact right time.”

Yet, with so much fervor over a millennial market that’s grown to 62 million people, one can’t help but ponder what streaming music recipe actually may register on their radar.

President and CEO of CMJ Adam Klein told The Daily Beast, “Apple’s new music service will inevitably become a major force—with a reported over 800 million registered credit cards how can it not! However, for major music audiences at college level and younger music fans, unless covered by the compelling family plan Apple is offering, they will be heavily inclined to stay with and find new ‘free’ services,’” said Klein. “So I don’t see the Apple service as a Spotify killer as there will still be very strong demand for its advertising supported ‘free’ offering.”

Free just may be the key word there.

Free.99 is the order of the day for many tech-savvy millennials who have a completely different approach given the sharing-economy, trust-deficit, and other new cultural paradigm shifts. In this demographic, bootlegging is still a viable option—and a popular one. According to data from Musicmetric, the amount of illegal Beyonce “surprise albums” that were downloaded across Bittorrent would have grossed an additional $3.8 million.

Such is the state of power plays today: the consumer is in control.

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Those who need further proof should look at Jay Z’s streaming music company Tidal, which seems to be experiencing yet more chaos with the departure of its second (interim) CEO just last week. Tidal has had a fairly hard time keeping up with its model of offering exclusives as a customer lure. Those of Rihanna, and a Beyoncé-Nicki Minaj duet were promptly snatched off the site by any music fan worth his/her social media handle, and promptly uploaded to YouTube. Take that, corporate parameters.

But perhaps Apple Music may have something with its Connect concept, should it become more extensive. In fact, a recent opinion piece in the music industry trade Digital Music News lamented, “Doesn’t anybody understand it’s not just about the music? We want a beautiful, all-encompassing, music listening experience exploring the liner notes, lyrics and artwork. It’s not just about the transaction!”

It’s the interactive elements and live feature, the author opines, that the people crave. “For example, on mobile, one could play the song, swipe right for lyrics, swipe right again for full credits…swipe right for bio info, album artwork, swipe again for tour dates, merchandise options, crowdfunding campaigns. But the superstars are so out of touch they don’t know what exclusives fans actually crave.”

Some experts in the music industry are aware of the appetite for something more, whispering about the next level of streaming: the live music concert. Indeed, recent Nielsen reports demonstrated that music fans would pay up to $2.6 billion more if they were offered behind-the-scenes, VIP access, exclusives, and live music experiences. A new company called MoovieTyme is about to add a currently under wraps concert offering that they are positioning to boost its Netflix-like online film offering.

Wrap this new level of concert experience up in a big bow of emerging technology integration with such platforms as mobile beacons, virtual reality, and more; and music entertainment moves to a serious next level.

For now, it may be a wait-and-see game on this latest move by Apple. May the best service win.