Apple Music Rumors Hint At Content Creation Plans - InformationWeek

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2/9/2015
05:50 PM
David Wagner
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Apple Music Rumors Hint At Content Creation Plans

Apple is denying rumors that it is buying Big Machine, the record label that brings us Taylor Swift. But such a move makes sense if Apple wants its streaming services to succeed.

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Apple might be looking to beef up its forthcoming streaming service in partnership with Beats Audio, even as it has denied the rumors that it is looking to buy Big Machine, the Nashville-based label best known for signing Taylor Swift.

Given that Big Machine's deal with Universal Music Group is reportedly up, according to Hits Daily Double it seems the label could be ripe for the picking. Denials notwithstanding, the concept of Apple buying a record label hints that there could something bigger at stake than just a streaming service. Is Apple looking to become a content maker?

As many have pointed out, for Apple to succeed in streaming with firmly entrenched competitors like Spotify and Pandora, it needs to bring something fresh and exclusive to the table. With services like these, you can compete on price, ease of use, or content. Since the services are free, price isn’t a possibility. Since Spotify and iTunes look eerily similar it is unlikely Apple can compete on ease of use (though don’t count out a new look). That leaves exclusive content.

Apple tried this just a few months ago with U2. Now, it looks like the company want to try again with a younger, potentially more attractive artist. And since she has publicly broken up with Spotify, buying Big Machine could be a coup for Apple.

Does this look like Apple's 'next big thing?'

(Source: Taylor Swift via Wikimedia Commons)

Does this look like Apple's "next big thing?"

(Source: Taylor Swift via Wikimedia Commons)

But here's the issue: Hasn't Apple learned the lesson well known to anyone in the music business? For every excited fan thrilled to have content from Swift, there are another 10 out there who hate the idea of going anywhere near her. And even superstars like Swift have a shelf life. Surely, Apple won't be forcing Swift onto our iPhones like they did with U2. But if it doesn't do that, then where’s the advantage in Apple buying Big Machine?

The advantage, if there is one, is in the idea of Apple taking on a Netflix- or Amazon-style strategy that includes creating exclusive content from the ground up. This is a strategy Apple seemed to be flirting with years ago when Steve Jobs invested in Pixar. What if the regulatory environment was different and Jobs had been healthier when Disney was bidding for Pixar? Would Jobs have been willing to buy it, instead of sitting on the Disney board as an investor?

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Perhaps it wouldn't have made sense at the time. But, consider that, in addition to a music streaming service, Apple is likely looking for something to differentiate itself on Apple TV. How good would Apple TV look now if it had exclusive rights to Pixar movies as well as the standard fare on most streaming services? If Apple wants into streaming, whether it is audio or video, at this late date, it needs to be a content maker.

Getting into audio is a cheaper area to start than video.

Perhaps buying Big Machine, or another label like it, is part of an exclusive content play that goes deeper than a couple of albums. As Apple found out the hard way, exclusive content deals are usually expensive and short-lived. Owning the content, even if you license to others, is a longer term profit strategy.

Will we see Apple Records? Well, the Beatles might still have something to say about that. But it stands to reason that Apple will look to start making content if it wants to position itself as more than just a convenient conduit to others' creative works.

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David has been writing on business and technology for over 10 years and was most recently Managing Editor at Enterpriseefficiency.com. Before that he was an Assistant Editor at MIT Sloan Management Review, where he covered a wide range of business topics including IT, ... View Full Bio
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Whoopty
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Whoopty,
User Rank: Ninja
2/10/2015 | 10:32:15 AM
Monopoly?
Apple will need to be very careful if it does go down the content creaiton route. It would very easy for it to be seen as anti-competitive if it were found to be promoting content from Big Machine over that produced by artists on other labels.

Still, I wonder if Apple's ship has somewhat sailed when it comes to music. People definitely don't have the same view of it as the world's biggest music hub like it was a decade ago. 
danielcawrey
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danielcawrey,
User Rank: Ninja
2/10/2015 | 1:14:33 PM
Re: Monopoly?
Apple wants to continue to grow, and because of this it is going to look at doing things in the content space. I'm not sure this is really their forte, as they have been better stewards for distribution of content rather than owning it. 

Yet I would not be at all surprised if Apple does buy Big Machine. Hopefully they will know what to do with it by maximizing the label's exposure. 
jastroff
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jastroff,
User Rank: Ninja
2/10/2015 | 5:07:24 PM
Re: Monopoly?
@dave -- everyone is in the content business these days. Amazon, Facebook and now Apple (?) Its a path for growth, and if they can raid the web for producers, well, it can't be that hard...Ironically all the old producers of content, like Time magazine, are going away. Reinventing the wheel?

 

 
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