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Summary:

Reports that Google will include social features in its new music service reinforce what the rise of Spotify and other services have already made obvious — namely, that Apple and iTunes are falling behind in the social-music race, which could have significant consequences for the company.

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According to a report from the Wall Street Journal, the music service Google is close to launching will include sharing features via integration with its Google+ platform, which isn’t that surprising, since Google has said the new social network will be part of everything it does. For Apple, however, the new social features in Google’s offering will reinforce what Spotify and other music services have already made obvious: Apple and iTunes are falling behind in the social-music race, which could have significant consequences for the company as the music industry continues to evolve.

By any measure, iTunes is still the 800-pound gorilla of the digital-music industry: More than 10 billion songs have been downloaded since Apple launched the service in 2001, and some record labels and music publishers now get a huge proportion of the revenue they make on their artists from iTunes. By launching the service — along with the iPod, which turned 10 years old on the weekend — Apple effectively re-engineered the entire music industry, convincing the major labels to use it as a conduit to reach music lovers who were busy downloading whatever they could get their hands on.

Obviously, that kind of power means iTunes isn’t going away anytime soon, and it will continue to be the main choice for record companies who want to monetize an artist. But the music business is changing — along with virtually every other form of media and content — as a result of the increasingly social nature of the web. And in that particular race, services such as Spotify are winning, in part because of their integration with networks like Facebook and their focus on streaming over buying.

Streaming and sharing is the new downloading

Facebook and Spotify have gotten a lot of criticism since the social network launched its “frictionless sharing” features, which allow services like Spotify to publish sharing info to a user’s Facebook page without having to ask permission every time. Many users have complained about this behavior — and that Spotify requires that anyone signing up have a Facebook account to connect to — and some have no doubt cancelled their accounts, but they are likely in the minority. In the end, this new kind of sharing, which shows links to what friends are listening to in the “ticker” stream on a user’s page, could be a hugely powerful driver for the industry.

And what kinds of weapons does Apple have? It has its massive market dominance — and it has Ping. Remember Ping? Apple’s music-based social network launched last fall, and was designed to do something similar to what Spotify and others are now doing: make it easy for users to share their activity and convince others to buy music. Except that Ping almost instantly looked like a social network from the late 1990s rather than a contender for the music-sharing future: as GigaOM’s Cyndy Aleo argued at the time, it looked lame in part because it wasn’t connected to anything else, and it made sharing surprisingly cumbersome (for his part, Om said that he thought Ping was part of “the future of social commerce”).

Ping shone a spotlight on one of Apple’s major weaknesses, which is a lack of knowledge or experience with social networks or social behavior. The company’s products are famous for their brilliant design and usability, but virtually none of that applies to things like Ping or Apple’s Game Center network (or to iTunes itself, arguably) since both seem more like ghost towns and afterthoughts than powerful competitors.

Twitter integration may not be enough

In an attempt to bolt on some form of social behavior, Apple added support for Twitter to Ping, and more recently it has integrated Twitter into many of its apps and services through iOS 5 — a ground-breaking move, since it rarely gives that kind of preferential treatment and real estate to a third party. (It tried to negotiate a Facebook deal but was rebuffed, presumably because of Spotify). This was a smart decision, since Twitter accomplishes much of what iTunes and Ping do not: Users can easily send out links to what they have bought or are listening to, and those links appear in the “media pane” at Twitter’s website and can be easily clicked on.

Despite this, however, it still feels like Apple is fundamentally playing catch-up in an industry that is moving rapidly towards sharing and streaming of music rather than simply purchasing, a la iTunes. With social services like Spotify and Rdio and MOG — not to mention Turntable.fm and Soundtracking — it is all about sharing music with friends rather than just acquiring it to keep forever. So how is Apple going to compete in this new kind of landscape? It will soon launch a streaming feature called iTunes Match, but the social element continues to elude it.

For the time being, at least, iTunes will remain the store of choice for many when it comes to buying music. And those who see their friends listening to music via Spotify and want to buy the same track may go to iTunes to do so — but then again, they might not. And if Google and Facebook integrate support for instant payments via Google Checkout or Facebook Credits, what kind of draw will Apple or iTunes have for new users then? The market dominance that Steve Jobs so brilliantly executed continues for now, but that dominance looks more and more precarious every day.

Post and thumbnail photos courtesy of Flickr users Josh Lindsay and Yodel Anecdotal

  1. Does it really matter? It’s so easy to acquire music now, do we really need a “social” music medium? And how much is it worth to any one individual company, when the entire worldwide music revenue is under $30 billion? And as far as Apple is concerned, who is going to stop using and buying iphones because itunes isn’t “social” enough?

    When it was created, itunes was a necessity for Apple to sell ipods. Now, with so many other music channels, it’s just a convenience for music (it has other value for Apple). I still use ipods (and now even an iphone, since it became available on a network other than ATT or Verizon), but don’t buy songs from itunes, and I suspect this is true for lots of people.

    Apple hasn’t missed this train, and if they did, they wouldn’t care, as they are flying on a jet now.

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    1. That’s a fair point, actually — Apple may not really care that much about music any more, since it was mostly just a way to sell iPods. It has much bigger fish to fry at the moment. Thanks for the comment.

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  2. Amrita Mathur Monday, October 24, 2011

    Definately missed opportunity. I love Apple, but Ping needs a massive revamp to compete. And even then, who knows if the market could sustain another push from them on this front.

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  3. This must be a generational thing because I have absolutely no interest or desire to share what I listen to with others. The more you share the easier it is to socially engineer your password or account details

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  4. I wonder if they’ve got a back pocket plan for iMessage similar to what Blackberry is trying with BBM Music.

    Instead of having a social network presence on the web, create the network out of iDevices with a distribution tie in to iCloud. That would partially limit the user base, but there are a lot of iPhone users out there, and because of their hive mind it would probably take off.

    At some point they’d have to launch a web presence that would continue to tie into iMessage functionality, while opening up the door to non-Apple users (iMessage app on other platforms?).

    Or then again, maybe it’s just fair to say that these giant companies can’t be successful in every area they dip their toe into.

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  5. I wonder if they’ve got a back pocket plan for iMessage similar to what Blackberry is trying with BBM Music?

    Instead of having a social network presence on the web, create the network out of iDevices with a distribution tie in to iCloud. That would partially limit the user base, but there are a lot of iPhone users out there, and because of their hive mind it would probably take off.

    At some point they’d have to launch a web presence that would continue to tie into iMessage functionality, while opening up the door to non-Apple users (iMessage app on other platforms?).

    Or then again, maybe it’s just fair to say that these giant companies can’t be successful in every area they dip their toe into.

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  6. David D'Agostino Monday, October 24, 2011

    iTunes match as announced is really a syncing service, not a streaming service. The songs it matches are downloaded to your device, so you can only listen to music you already own. But I don’t expect them to sit still…

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  7. I don’t really see the value of this either. I can see the value of a Facebook page for the artist with links to concert ticket purchases and merchandise like they do on the web already.

    Spotify works because some people like variety and new music and don’t care to own it. Pandora works because it helps people find new music by playing songs that are similar to songs they like.

    But unless you are known for picking bands that become popular or even interesting, no one cares what you like.

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  8. I don’t necessarily think that there’s a nexus among commerce, music, and social. Music and social yes. Music and commerce yes. In other words, if a friend introduces me to a new band I will buy the song I like on iTunes. I will not create a Spotify account (especially since you can’t use your email address as a login). There’s a place in the world for Spotify, but it’s a niche. iTunes is Wal-Mart (or Tower Records in its day). I still think “normal” people want to buy the 100 to 1,000 songs they like, and don’t really have an interest in being able to listen to millions of songs.

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