Apple Music enters a market Apple once led

Returning to a category it had defined

On 30 June 2015, Apple launched Apple Music in more than 100 countries. It cost 9.99 US dollars a month for one listener and 14.99 for a family, came with a three-month free trial, and combined an on-demand catalogue, a 24-hour radio station called Beats 1 and a social feature named Connect.¹

The position was unfamiliar. Apple had built the digital music business with the iPod and the iTunes Store, and by 2015 it was arriving late to a market it no longer set the terms of. Spotify had launched in 2008, had roughly 20 million paying subscribers, and had established subscription rather than ownership as the default way people listened.²

Buying the way in

Apple's route back was an acquisition. In May 2014 it agreed to buy Beats Electronics for 3 billion US dollars, the largest purchase in the company's history at that point, made up of 2.6 billion in cash and 400 million in stock.^{3, 4, 5} Beats brought a headphone business with strong margins, a small streaming service called Beats Music, and, most importantly, two people: Jimmy Iovine, the producer and Interscope founder, and Dr. Dre.^{3, 6}

The reasoning was more about relationships than technology. Iovine had spent decades inside the record industry and understood how labels and artists negotiated.^{3, 7} Apple was buying a position in an industry that had spent fifteen years treating technology companies as adversaries, and it paid for people who could speak on both sides of that conversation.

The brand was left standing. Apple did not fold Beats into its own identity; the headphones continued under the Beats name, and Beats 1 carried it into the new service.^{6, 7} For a company that historically absorbed what it bought, keeping the acquired brand visible was a notable decision, and it gave Apple Music a cultural voice its parent could not have used itself.

Curation as a point of difference

The launch argument rested on human editing. Apple positioned its recommendations as the work of people rather than algorithms, hired the broadcaster Zane Lowe from BBC Radio 1 to anchor Beats 1, and staffed the station with presenters rather than playlists.^{1, 8} Iovine described the problem as one of context: the catalogue was already infinite, and the value lay in knowing what to play next.

Apple also declined to offer a free advertising-supported tier, the mechanism through which Spotify converted casual listeners into subscribers. The choice was consistent with the wider brand, which had never competed on price, and it was popular with rights holders who disliked the economics of free streaming. It also removed the top of the funnel, and Apple leaned instead on the several hundred million devices with the service already installed.

The product itself drew criticism the brand was less used to receiving. Reviewers found the first version of the app crowded and hard to navigate, with the streaming catalogue, the user's own library, the radio station and Connect competing inside one interface.⁹ For a company whose reputation rested on removing choices, shipping something widely described as confusing was an unusual position, and Apple spent the following two years simplifying it.

A public correction before launch

Nine days before the launch, the arrangement met its first test. Taylor Swift published an open letter objecting that Apple did not intend to pay artists during the three-month free trial, writing that the policy was not fair to writers, producers and new acts.⁹ She withheld her album 1989 from the service.⁹

Apple reversed within a day. Eddy Cue, the senior vice president responsible, announced on Twitter that artists would be paid throughout the trial period, and Swift made the album available.^{1, 9} For a company that rarely changes course in public, the speed of the response was the point: Apple had spent a billion-dollar acquisition establishing that it understood artists, and it was not going to spend its launch week arguing with one.

The episode also demonstrated something about the shape of the market Apple had entered. In hardware, no single customer can move the company. In music, a catalogue is the product, and the people who own the catalogue can withhold it. Apple had spent 3 billion dollars partly to avoid exactly that dynamic and encountered it in its launch week anyway.

Growth was steady rather than sudden. Apple Music reported 10 million subscribers by January 2016, 20 million by December 2016, 50 million by May 2018 and 60 million by June 2019, and it became the second largest paid streaming service worldwide.⁹ Connect was quietly retired, Beats 1 was renamed Apple Music 1 in 2020, and the service settled into its role as part of a services business that Apple increasingly used to describe itself to investors.^{8, 9}