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Apple's New Music Service Will Push Paid Subscriptions, With Free Samples

Coming soon from Jimmy Iovine: The anti-Spotify service.

Asa Mathat

Apple wants people to pay for its streaming music service. But that doesn’t mean it won’t let people listen for free, too.

Apple is still negotiating deals for the streaming service, which it would like to announce soon. But it would like to offer several ways to let people listen to some music without paying, according to industry sources. Those include:

  • A free trial period, which may range from one to three months, depending on the outcome of Apple’s negotiations with music labels.
  • A feature that will let music owners upload a sampling of songs that users could listen to without subscribing to the service. Several sources describe this feature as something akin to SoundCloud, the music streaming service that describes itself as the “YouTube for audio.”
  • A new version of Apple’s iTunes Radio, featuring stations programmed by human beings instead of computers, which could be localized for different countries. Apple hired popular BBC Radio 1 DJ Zane Lowe this spring and has subsequently wooed four top producers from the station, Music Business Worldwide reported.

But as we have previously reported, Apple doesn’t intend to provide free, unlimited on-demand streaming, as competitors Spotify and YouTube do. In private meetings with label executives and other music industry figures, Apple has been arguing that free streaming won’t generate enough money for the industry via advertising, and doesn’t give enough people incentive to pay for subscriptions.

That stance syncs up with public comments made over the last six months by the industry’s three big music labels; it has also triggered preliminary investigations by the European Commission and the Federal Trade Commission in the U.S. Sources say the FTC is looking at whether Apple is using its position as the largest seller of music downloads to put rival music services like Spotify at a disadvantage.

Under former CEO Steve Jobs, Apple ignored the streaming music market and focused on the sales of music downloads, via its iTunes store. But last May current CEO Tim Cook telegraphed his plans to change direction on music, by spending $3 billion to acquire Beats Electronics and Beats Music, a subscription service that launched a few months earlier.

The acquisition brought Beats co-founder and veteran label head Jimmy Iovine to Apple. He has served as its colorful front-man in seeking support from the labels, artist managers and music publishers, working alongside the traditional iTunes music team.

The company has promised a thunderous marketing campaign to promote the benefits of a subscription music service to the 800 million people who have iTunes accounts. That may benefit other services as well, including competitor Spotify, which recently completed a $350 million funding round that values the streaming service at $8 billion.

Apple declined to comment on either the details of its new service or any regulatory inquiries.

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