Apple can make its streaming music service free. And it’s because of iBeacon.
The New York Times reports that industry analysts are predicting a tough climb for the company’s new streaming music service. Apple will need to shift from the pay-to-download model of iTunes toward the all-you-can-eat-buffet of streaming music. And in doing so, it will need to get the support of a music industry that can now turn to Pandora, Spotify or other services to push back on pricing and access.
But these reports are looking for the Apple advantage in all the wrong places – focusing on apps and pricing, iTunes and vivid visuals.
And while those things might be important, Apple has advantages that other streaming services don’t.
This includes access to a platform for music which is larger than the Web and bigger than mobile – a platform made possible, in part, by iBeacons.
Apple Is – Gasp! Not The First-Mover
According to Toni Sacconaghi, a financial analyst for Sanford C. Bernstein, Apple is late to the game.
“They’re used to being a shaper rather than a responder,” Mr. Sacconaghi said. “This is one of the few times where Apple is playing catch-up and not necessarily coming from a position of strength.”
Which makes me wonder what universe Sacconaghi is analyzing, exactly.
History has shown the opposite, of course. The entire Apple business model is based on coming late to the game – letting others get there first and arriving later with far superior products, whether music players, tablets, phones or watches.
If there’s a company on the planet who has shown it knows how to excel at coming second it’s Apple.
Regardless, the media seems happy to create a narrative in which there’s a good old-fashioned showdown between entrenched players like Spotify and the “newcomer” which is Apple.
Is The Apple Advantage an Interface?
These reports predict that Apple might have a shot because…well, because it will have a shiny interface:
The new music app, which is a collaborative effort between Mr. Reznor and other Apple and Beats employees, including Jimmy Iovine — who founded Beats with the hip-hop star Dr. Dre — will feature the streaming music service with many of the same characteristics as the Beats Music streaming service, one Apple employee said. Those may include curated playlists and a more vivid visual appeal, while conforming to Apple’s sleek and minimal design aesthetic, one person said. The name Beats Music will most likely be shed.
More vivid visuals. A minimal design aesthetic.
I can hear Jony Ive now, luxuriating over how every single pixel is perfect, hand drawn from molten gold with every musical note optimized down to nanogradients of sound.
The larger Apple advantage isn’t, of course, an interface. (iTunes has survived just fine even in its current incarnation as a benchmark for horrible UX design).
Apple’s advantage is its ecosystem, from the hardware to software, continuity between devices, and connectivity to your iPad, Apple TV or coming Watch.
If nothing else, Apple could drive a user experience which adapts a music stream based on whether you’re running or working out, can shift a stream from your iPhone to your home speakers with the flick of your thumb, and connect the mood of your music to the Philips lighting in your living room.
This ecosystem on its own, in addition to 800 million iTunes users, can give Apple an edge, regardless of the monthly price.
But there’s another frontier worth considering and it has nothing to do with the device in your pocket or the technology in your home. Because elsewhere the physical world is becoming a digital interface.
And streaming music could, one day, be embedded in things, with iBeacon showing us the way.
iBeacon and The Battle for Physical Space
iBeacon is Apple’s trademark term for Bluetooth Low Energy devices. By sending out a small radio signal, beacons allow our phones and other devices to “see” the world around them.
Beacons are being used in museums and public gardens, shopping malls and parking lots. They let the owner of a “place” send out a push message, a coupon, a piece of media or a special offer to a user’s phone via a ‘beacon-enabled’ mobile app.
Unlike NFC or QR codes, the user doesn’t need to do anything. Their app can be closed but their phone will still listen for beacons.
You can trigger a lock screen message or your app can just be a lot smarter when a user opens it up – sensing nearby beacons in order to present contextually relevant content.
Beacons represent one technology amongst many that are enabling digital interactions with physical space. Anything you can do online can now be triggered by people, places and things. You can “Pin” a store display, Tweet a painting in a museum, or browse a catalogue in the hardware store.
Often conflated with the Internet of Things (which generally refers to the ability of sensors and devices to talk to each other) they nonetheless represent a larger trend towards a fully connected physical world in which billboards know who you are (Minority Report style) and products on a shelf can talk.
Unlocking the Value of Proximity
This convergence of the physical world with digital affordances represents what we think is a platform that will be larger than the Web, which will be more disruptive than mobile, and which will enables new forms of value creation that weren’t previously possible.
With beacons we can link media, content, data and social interaction to the “last meter” of human experience. We can create digital engagement at the point of purchase, we can nudge users from one gallery to another in a museum, we can connect how we live, work and play to increasingly smart and data-driven systems.
This opportunity is both massive and massively frightening.
The convergence of the digital and physical worlds leads to self-driving cars and delivery drones, an apocalypse of artificial intelligence and the benefits of medical research conducted at massive scale.
It also unlocks value that was previously either unavailable, obfuscated or difficult: because if I can connect what you do on a phone to your presence in physical space, if I can connect a piece of media to the point of purchase, it means I can create a connection between digital media and physical activity or product purchases.
It’s this convergence which could both lead to a ‘renaissance of retail’ and its (even more) massive disruption.
In a future of beacons, we’ll see the “AirBnB of grocery” and the “Uber of retail”.
And we’ll see how things like music won’t just be portable. Their value will be embedded in everything.
The Next Big Apple Play is Loyalty
OK, I hate the term loyalty. Because most loyalty programs aren’t about loyalty. They’re transaction-based rewards for purchasing stuff.
I hate the idea of a product called called Apple Loyalty – it sounds like an airline rewards card or a bonus system for owning a ton of Apple devices (buy 10 iPhones and get a free Beats headphone!).
But if there was a company that was going to reinvent the concept of “loyalty” who better than the company that knows something about loyalty? And who better than a company leading the charge on mobile payments, with a growing infrastructure of merchants and payment providers, with the ability for stores to register their locations, and with the software tools to make beacon-detection part of the retail landscape?
Think of it this way:
- You have two coffee shops near each other
- One accepts Apple Pay, has iBeacon installed, lets you order in advance, makes the experience of buying your cappuccino frictionless
- It also has a system in place where you show up, buy a coffee, and your Apple streaming music account is topped up or you’re able to pick up a recommendation from the staff or others who have visited the store
Or imagine going to a concert at a local club and there’s a “powered by Apple Music” sign at the front entrance.
You join a pop-up social network, you share some of your favorite Apple Music streams with fans nearby.
And once you leave your Apple Music account has been personalized, you have access to exclusive band interviews or raw clips from their last recording session, and your streaming costs for the month have been reduced by half because the concert promoter kicked back an account top-up with your ticket purchase.
An Apple patent for iBeacon imagines concerts as venues for media delivery:
Apple’s patent FIG. 15C indicates various location-based content that may be provided in connection with a concert or other music venue. A concert or music venue may provide content including, for example, music, setlists, virtual cards, website information, schedule information (e.g., for upcoming shows at the venue), graphics (e.g., album art, pictures of the band members, etc.), ticket sales (e.g., provide user option to purchase tickets in advance), general information relating to the concert, or any other information.
It’s not loyalty in the traditional sense. It isn’t about transactions it’s about experiences.
And it leverages the power of beacons: because for the first time, physical venues have a financial incentive and an ability to measure digital interactions against real-world behaviour.
If I own the coffee shop and I become an Apple Loyalty location I’m doing it because I can drive more foot traffic to my store compared to the one down the street. The fact that you as the customer get rewarded with Apple Music, if you get a bonus song instead of $2 off your next purchase, so much the better. I’d rather reward you with something you LOVE anyways instead of reducing your bill the next time you visit.
The coffee shop wins. Apple Music wins because it gets more “listens”. And the consumer wins because someone else is partly footing my music bill, and their experience of “place” becomes more deeply grounded in their digital and physical life.
iBeacon, Apple Pay and Apple “Loyalty” are simply the facilitating technologies which will help to triangulate our digital lives, our physical visits, and the interests of the places that we go.
Apple isn’t alone in wanting to own the path you take through the world.
While Apple is focused on closed ecosystems and what I think of as “deeply connected” experiences, Google is coming at the same challenge from a different direction – using the “cloud” to provide an always-on, “deeply ambient” suite of technologies to help guide you through space.
Best typified by Google Now and Google Waze, their goal is to quietly collate where you go and how long you visit with its massive data sets in order to predict and present content that will become increasingly smarter and smarter. Google will know where you’re going before you’ve even decided yourself.
For Apple, the future is smart devices connected to relatively dumb “clouds” (an idea reaffirmed by Tim Cook’s focus on privacy).
For Google, the future is a smart cloud connected to relatively dumb devices.
But both are on a path to take your experience of them out of your pocket and into your home, into the stores you visit and into the music you listen to, television you watch, and games you play.
Beacons are part of this larger journey – dumb devices against which value can be assigned, music unlocked, experiences created, with the result being an absolute blurring of the lines between our digital personas and our physical bodies as they move through space.
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What do you think? Will Apple Music be more than just another version of ‘streaming beats’? How might it connect to Apple loyalty, Apple Pay and iBeacon? Drop a comment below.