Apple's MATCH means a win-win situation

This week was full of Apple announcements. I’m sorry if I’ve been talking too much about Apple lately but I think - as do other people - that a lot of what they announced is incredibly important.

The iCloud product featured a very interesting take in music. If you purchase a song through iTunes it will automatically be stored in your iCloud. You can then download the song in any other Mac or iOS device you own whenever you like, for free. This seems great so far, but what about our other music, the one we ripped from CDs we legally bought? Here is how it works. Apple has an 18 million song catalog, and chances are that the songs that you ripped into iTunes are among those songs. So, iTunes will scan your music library and will MATCH every song you have with the ones Apple has in its catalog. This will enable you to wirelessly download these songs to any iOS device you own, for $24,99 a year. In other words, you’ll have to pay to store music you already own. Bear in mind that all of the major music labels agreed to Apple’s term before this was launched. And why wouldn’t they? Apple offered around 60% of future profits. 

Profits aside, this business model to monetize a song after its been purchased sounds great for music labels. Subscription services like Spotify and LaLa (acquired by Apple) have existed for years, but record labels don’t seem to like the unlimited streaming of songs. In fact, a lot of people think that’s why Spotify hasn’t been able to Launch in the US yet. The fact of the matter is it seems that Music labels will be able to find different ways to monetize their content. And as time goes by, the opportunities seem to be growing. With big contenders like Google, Apple and Amazon fighting over the distribution part of the value chain, other players like Facebook have decided to join the battle. 

There have been rumors that Facebook and Spotify will launch a music service together. Wouldn’t that change things a bit? Regardless of who wins, it appears that the music industry is steering towards a subscription model. What the big players must not forget is that the deals need to be attractive to both consumers and record labels equally. So far Apple figured out what Amazon and Google didn’t. But now the cat is out of the bag, and I would dare to say that soon enough Amazon and Google will copy Apple’s formula and the record labels will agree to their terms. 

It looks like things are looking up for everybody. On one hand, consumers win with great services at a relatively cheap price and with their music available where ever they go; on the other, companies win with new products and additional revenue and record labels win because they can finally monetize their catalogs efficiently.