Memo to Apple's Tim Cook: Recorded music is worthless

If you can get it for free on YouTube, Pandora or Spotify, that's what it's worth: nothing.

Steve Guttenberg
Ex-movie theater projectionist Steve Guttenberg has also worked as a high-end audio salesman, and as a record producer. Steve currently reviews audio products for CNET and works as a freelance writer for Stereophile.
Steve Guttenberg
2 min read

Steve Guttenberg/CNET

I was thinking about all of this when I read about Apple's coming pay-only streaming service. What a crazy idea; I guess Tim Cook thinks Apple can seduce the faithful to pony up $10 a month for music.

Apparently, Cook hasn't heard about how things are going with Jay Z's Tidal, a pay-only streaming service that's going nowhere fast. Or that Beats master Jimmy Iovine didn't sign up oodles of paying customers for his "premium" Beats Music streaming service that Apple bought. Cook must be banking on his hundreds of millions of iTunes customers, hoping they'll make the jump over to Apple streaming.

Only a fool would deny Apple and iTunes massive successes, but competing in the "free" market -- that's foreign territory for Apple. They thrive in high-profit, high-demand goods where their faithful legions literally line up to buy the latest and greatest goodies. Sorry Apple, the music business reconciled with the free model years ago, and once you give the goods away for free it's hard to get the public to see any value in recorded music and it's worthless.

To get the service started, Apple will likely offer free trial subscriptions. Free is probably the only way to get enough people to give "Apple Music" a try, but how many will stick around after the free trial runs out?

According to a Wall Street Journal article, the Apple-owned Beats Music service has just over 300,000 paid subscribers, and Apple's iTunes Radio has gained "little traction." Meanwhile, Spotify has 15 million paying subscribers, plus 45 million free users. Pandora has 79 million active users, and posted a loss of $30 million on $921 million in revenue last year. Profitability in the "free" market is elusive.

Concerts are another matter, fans pay dearly for the experience of breathing the same air as their heroes, and happily buy over-priced merch. That hasn't gone away, but singles and album sales on CD, LP or download continue to head south. Free and paid streaming subscriptions are up, but free subs always far exceed paid ones.

Where all of this leads is anybody's guess, but it's surprising to see that it's taken Apple this long to commit to streaming music in a big way. Will they attract enough $10 a month subscribers this late in the game? I doubt it.