Apple Music could lead to Apple spending $10 billion annually on content

In Music
It's only fair to share...Email this to someone
email
Print this page
Print


Apple Music is far from a laggard. If anything, it validates how powerful the Apple platform is that it can be so late to a market and still experience such hyper-growth.

Now it’s expanding beyond music into video content. Even if they missed the mark with “Planet of the Apps,” it’s important to remember that Netflix’s first piece of original content was “Lillyhammer” and not “House of Cards” (that was its second). Apple will learn and get better (especially if it hires ex-HBO content head Michael Lombardo, as rumors have suggested lately).

If Apple is going to give compelling video and audio content as part of Apple Music, its continued white-hot growth in subs should continue.

To be clear, just because Apple Music will continue to grow doesn’t mean that Spotify can’t. It won’t be a zero sum game. Apple Music, Spotify and Netflix can all be successful streaming subscription services.

Apple isn’t pushing Apple Music to be a massive moneymaker for them. It’s doing it to allow it to reinvest in a big way into content, making its ecosystem even more valuable than it already is to its users.

Yes, Apple Music’s current $3.2 billion-a-year run rate is nothing to sniff at. It’s about half the annual revenue of current stock market darling Nvidia. But even if it got to a $10 billion-a-year run rate with 80 million paid subs, it’s important to recall that Apple’s current annual revenue is $220 billion. Apple Music will always a drop in the bucket.

By deciding to charge for Apple Music — instead of giving it away for free — Apple has even more resources to throw at content. Maybe it pays for exclusive music from Drake or Chance the Rapper. Maybe it pays for future “Planet of the Apps.” Or maybe it gives Lombardo (if he joins Apple) a $10 billion-a-year content budget (when Apple gets to 80 million subs) instead of the $2 billion-a-year content budget he had at HBO.

Spending $10 billion a year on content is nothing to sniff at. Netflix is spending this year on content. Amazon is spending $4.5 billion.

Apple is not dipping its toe in the water with “Planet of the Apps” to make money from it. It is building a streaming service that helps solidify the value of the Apple ecosystem for the 212 million people who bought iPhones last year and to keep them upgrading as frequently as possible. Apple wants people to get hooked on their HomePod speakers to use with Apple Music and not on Amazon Echo or Google Home.

Apple Music houses big ambitions for Apple. Two years in, it’s off to a great start — whether or not “Planet of the Apps” is a hit.

To sign up for Eric’s monthly Tech & Media Email, . And to hear his podcasts on these topics, .



It's only fair to share...Email this to someone
email
Print this page
Print
доставка води борисполь

Mobile Sliding Menu