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Apple senior executive Eddy Cue said that Apple Music is at the heart of the company's ongoing content plans in an interview with Hollywood Reporter.
Cue played down Apple's interest in buying a TV or film production studio, or in taking on companies like Netflix in streaming video. Instead, Apple Music is the centerpiece of the company's content plans, with all of its current content initiatives tying into the platform.
Music streaming continues to accelerate among consumers, increasing by nearly 59% this year compared with 2015, according to the Nielsen Mid-Year Music Report. While this is an encouraging trend for Apple Music, the company still faces two main challenges in the music-streaming space:
- An increasingly crowded music-streaming market, with incumbents such as Spotify, SoundCloud, Google Music, and Pandora already well entrenched. And last month, Amazon announced that it would launch its own music-streaming service. This market challenge helps to explain Apple’s reported interest in buying Tidal, the music-streaming service run by Jay-Z.
- Consumers’ unwillingness to pay for music streaming services. Despite the surge in music streaming, consumers remain largely unwilling to pay to access such services: only one in 10 digital consumers worldwide pay to stream music, according to a study by GlobalWebIndex. Apple Music attempts to circumvent this issue by making itself available as a paid service only (after a three-month free trial). As of mid-June 2016, Apple Music had 15 million subscribers.
The Eddy Cue interview suggests that Apple is focusing first on building out its music streaming business, with the possibility of venturing into other forms of content creation later on. Once Apple Music is sufficiently developed, Apple could begin focusing on developing its Apple TV platform as a robust streaming platform to compete against Netflix and traditional cable providers. Alternatively, Apple could also concentrate on developing feature-length films.
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