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Will Apple Music Revive the Industry?

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Will Apple Music Revive the Industry?

Will Apple Music Revive the Industry?

June 25 2015, 07.45am GMT


Despite the fact that the music industry, led by Taylor Swift, gave Apple Music a torrid time regarding royalties during the 90 day free-trial period, insiders representing different labels believe the streaming service might provide a much needed lifeline for the music industry.

The New Music Seminar, an annual three day music industry conference to discuss the future of music, held a news conference on Tuesday afternoon where it became obvious that the industry welcomes Apple (AAPL, +0.85%) as an important entrant to the music streaming space.

Tom Silverman, founder of the New Music Seminar and also CEO of Tommy Boy Entertainment, a 35 year old music label, believes this is more than just good for the music industry. Silverman added that the industry had declined by nearly 70% since 1999, ushering in the greatest recession they have ever seen. He also revealed that in order for the industry to return to 1999 figures, adjusted for inflation, 150 million new music subscribers at an average of $60 per year would be needed.

Silverman calculated that if Apple Music could convert the 200 million free-trial signups into subscribers, the potential existed to triple the growth of streaming. To provide a perspective to this number, opposition music streamer, Spotify, only recently exceeded 20 million subscribers.

Additional potential in the growth of music streaming came in the announcement on Tuesday by Google Inc. (GOOGL, -0.86% )that it would be launching an advertising-based free streaming radio service similar to that of Pandora Media Inc. (P,-1.57%) as a part of the current $9.99 subscription Google Play Music Service.

Richard Stumpf, CEO of Atlas Music Publishing, said that the entrance of Apple Music would likely result in a significant investment by Apple to promote the streaming service.  This would at the same time have the potential to enhance broader industry awareness. Stumpf added that, “Apple will bring a lot of visibility”. 

Interestingly, Stumpf was initially one of those who took issue with the way Apple had incorporated independent musicians. During the Tuesday news conference, he expressed the view that Apple wouldn't pay full royalties during the trial period despite having capitulated to the industry demands. Taking all into account though, he welcomed Apple’s entry into the streaming world saying, “On the whole, from a deal perspective, it’s not bad.”

While the news for the music industry has been optimistically received, there has been little effect on Apple stocks which fell 0.4% on Tuesday, followed by a small upward movement on Wednesday. The stock is down about 0.1% over the last three months, indicative of the near zero-effect all the hype about Apple Music has had on investors.

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