This week, Spotify introduced a beta feature in its Apple Watch app that now allows users to stream music directly without an iPhone nearby. Previously, Spotify's app was basically a remote for controlling your music on an iPhone.
That may seem like a small change, but it has very big implications for the battle between Spotify and Apple's subscription music service, Apple Music.
That battle has been brutal and fought on many fronts. Back in 2015, Spotify encouraged its customers to sign up on the company's website and not through the iOS app. In 2016, Spotify removed the ability to sign up through Apple's in-app purchase system altogether.
Early last year, Spotify filed a complaint with the European Union alleging anticompetitive behavior by Apple over its App Store policies. In September, Spotify joined developers like Epic Games in forming the Coalition for App Fairness, challenging Apple's control of the App Store.
Just as recently, Spotify called on regulators to take action after Apple introduced its Apple One subscription bundle. That's actually where the battle gets really interesting, because Spotify's new Apple Watch functionality actually undermines the most compelling reason to sign up for Apple One.
The all-in-one bundle Apple introduced in September allows you to save a few dollars compared to signing up for each service individually. For example, the individual plan gives you Apple Music, Apple TV+, Apple Arcade, and 5GB of iCloud storage for $14.95, which saves you $6.
A Premier plan includes those services, along with Apple News+, Apple Fitness+, and increases the iCloud storage to 2TB for $29.95. Apple doesn't break out subscribers for its various services, but estimates suggest the company has more than 170 million paying iCloud customers and 60 million Apple Music subscribers.
I think it's fair to say that those two services are the main attractions for Apple's services bundle. The smartest thing the company did was to layer additional services that few people are willing to pay for on top of the ones they already pay for. Even smarter would be for Apple to go the next step.
There's a world where it's not inconceivable that Apple builds a bundle that includes Apple One and an iPhone with AppleCare. We're already almost there — you can buy your iPhone and pay for it monthly and add AppleCare. You can subscribe to Apple One and get the others.
Except Apple's bundle isn't exactly great. It's a good value from the perspective that it saves you a few dollars if you already pay for Apple's services. It's not a great value in that Apple's services have never been the very best at what they do.
Apple Music hasn't necessarily ever been "better" than Spotify— it was just more convenient. If given a choice, I suspect most people, even Apple loyalists, would choose Spotify over Apple Music. That explains why Apple Music's subscriber base pales in comparison to Spotify's 144 million paying customers.
And few think that iCloud is a better product than DropBox or Google Drive. I've never heard anyone argue that Apple TV+ is better than Netflix, the latter of which has almost 200 million subscribers.
None of Apple's services, on their own, are the best at what they do. They're just the most convenient if you're using Apple's hardware.
One of the biggest reasons is that it simply works with all of your Apple devices. It's integrated into the experience of using your iPhone. You get a free trial when you buy a new device. It works with AirPlay. If you have a HomePod, Apple Music is the default service. If you use an Apple Watch, you can stream over WiFi or LTE, even without your iPhone — something you couldn't do with Spotify.
Until now.
By adding this capability to the Apple Watch app, Spotify is chipping away at the main value proposition for Apple's services — convenience. The bigger problem for Apple is if the company takes the next logical step.
Imagine a $19.99 monthly subscription bundle that included Netflix and Spotify. For that matter, add in 2TB of storage from DropBox and make it $24.99. It would be hard to justify signing up for Apple One.
To be clear, I have no inside information, and I haven't seen any signs that Spotify and Netflix are moving in that direction. They're both currently at the top of their game, dominating their respective industries. But that's a deal that could absolutely happen.
If it does, I'd sign up for it in a second. I already use both services. I also subscribe to Apple One. But the more convenient alternative options like Spotify get, I'm starting to wonder why. That's bad news for Apple.
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