Blog Post

Apple Tries To Marry Music Recommendation And Retail, But No Streaming

Apple (NSDQ: AAPL) is trying to close the loop between music discovery and iTunes Store’s music purchasing, by injecting a brand new social network in to iTunes itself.

Integrated in to new iTunes 10 and in to the iTunes Store app on iOS, “Ping” lets users “follow” friends to see what they’re downloading from the store, which concerts they’re attending and what opinions they are posting about songs.

Plus, users can “follow” artists, who will be able to list their own favored tracks, post concert listings, photos and videos for fans. The gig info comes from Live Nation.

These kinds of features are already on offer in a range of existing websites, including Last.fm (for listening habits and concert attendances), Songkick (for concert sharing), Spotify (for social sharing and playback) and MySpace (NSDQ: NWS) (for following artists and for playback itself). Spotify only launched its social features in April, using Facebook’s membership graph, after reluctance since launch.

But iTunes is the most popular music player out there, and iTunes Store now by far the largest music retailer there is, with over a quarter of U.S. sales. Each of these rival, fragmented services should be concerned at the prospect of unifying their discovery feature sets together with music itself inside the application.

“It’s a social network for music,” Steve Jobs said in Wednesday’s announcement. “It’s Facebook and Twitter meet iTunes – it’s a social network all about music.” Here’s Jobs updating his own Ping profile inside iTunes…

Ping’s significance is not just that it starts offering consumers features available elsewhere – it could also mean a much-needed bump in actual iTunes Store sales…

The recommendation by friends of tracks, right adjacent to the retail store itself, could produce something of a social, or viral retail curve for track downloads. It will be welcome – North American digital music sales grew only 1.1 percent in 2009.

But, as interesting as Ping is, there are things, some of which were rumored, which Apple emphatically did not introduce on Wednesday…

There is no web- or “cloud”-based equivalent of iTunes, as speculated, even if Apple did add preview web pages for tracks recently…

While Apple is flipping Apple TV from download-to-own to a streaming movie rentals model, it is certainly not tampering with the a la carte, per-track-downloads formula that has made iTunes Store a success.

That means upstart services like Rdio, Mog.com and Spotify, as well as existing players like Rhapsody, remain free to exploit the unlimited-access, or “celestial jukebox”, model that is garnering much attention, not least from label bosses like WMG CEO Edgar Bronfman Jr., who is looking to the newcomers as foils against labels’ iTunes dependency.

Talking about Apple TV, Jobs said: “People don’t want that syncing stuff – it’s too complicated.” Yet, unlike the streaming upstarts, iTunes is still highly dependent on syncing to a music library that’s stored primarily on a computer. And there was no suggestion that music could stream from servers to Apple TV in the same way movies will.

Indeed, Apple is still milking this dependence on syncing to its portable players, with Christmas refreshes for all three models in its iPod range, including reintroducing hard buttons to the Shuffle, taking buttons off the Nano and introducing iOS with multi-touch and slimming down the iPod touch.

Jobs said Apple has sold 275 million iPods to date: “We though it was appropriate, since next spring it looks like iTunes is going to surpass sales of CDs in the U.S. – we thought maybe its time to ditch the CD in the (iTunes) logo.”