Apple Planning Revamped Music Streaming Service with Marketing Blitz

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After the first iteration of the Apple music streaming service product met with tepid reviews and several executives brought in to revive the company’s music strategy departed, Apple is planning on sweeping changes to its year-old product. The company is altering the user interface of Apple Music to make it more intuitive to use, according to people familiar with the produced who asked to not be identified because the plans aren’t public. There is also plans by Apple to better integrate its streaming and downloading businesses and expand its online radio service, the people said. The reboot is expected to be introduced at the company’s Worldwide Developers Conference in June.

Apple’s Music Streaming Service Revamp

Apple Acquires Beats Music as Apart of Marketing Blitz

These changes will be accompanied by a marketing blitz to attract more customers to the $10-per-month streaming service. As iTunes rival Spotify continues to draw in new subscribers and iTunes sales stagnate, Apple is attempting to reclaim its dominance in music.

The company acquired Beats Music two years ago. This was in part to rethink its approach to the music business by blending its technological expertise with the entertainment industry experience of Beats executives such as Jimmy Iovine.

Culture Clash Within Apple

The combination hasn’t fulfilled its potential yet. A rare culture clash within Apple was sparked by the deal that led to the departure of several key managers. It also created a product that many critics say doesn’t meet Apple’s own lofty standards. The company is struggling to integrate its employees and unite the streaming and downloading businesses into a cohesive music strategy.

Content head Robert Kondrk and Nine Inch Nails frontman Trent Reznor are supervising the service’s new look following a management shakeup. Input has also been provided by design chief Jony Ive’s team, along with Mr. Iovine and Eddy Cue, the senior vice president in charge of Internet services.

Struggle to Transition to Digital Music Streaming Platform

Apple’s CEO Tim Cook is banking on services like Apple Music to reignite growth as the company’s stock plunges on concerns about slowing iPhone sales. The is an argument among many analysts that one of the biggest threats facing Apple’s business is an inability to develop strong Internet-based tools to go along with its beautifully designed hardware. Other services such as iCloud, Maps, Photos and Siri have also faced criticism for being inferior to competitors.

According to Colin Gillis, a New York-based BGC Partners analyst, “When it comes to software, Apple performs with less elegance than it does when it comes to hardware. Apple Music is underwhelming. They have subscribers because of their platform. If you have that kind of subscriber base, you should have millions of subscribers.”

Apply was dominating the transition from physical to digital music, but after acquiring Beats, iTunes began to decline. The remedy was obvious to Iovine and other Beats executives: the company should de-emphasize iTunes and plow money into the on-demand streaming service that Beats created.

However, there was a mix of responses after the release of Apple Music in June. While reviewers praised the depth of the music catalog, they criticized its confusing interface. CNET wrote, “The app’s design is cluttered with too much information and difficult to navigate.”

Apple does not want to undermine its profitable download business. Therefore, the company has been reluctant to promote the streaming service to customers who make purchases a la carte.

Music Artists’ Vs. Apple Controversy

When artists such as Adele and Taylor Swift refuse to make new music available through streaming services, the download store gives Apple an advantage. This can frustrate customers though because they will need to spend $10 a month to have unlimited access to Apple’s streaming music library. According to two people familiar with finances, revenue from album and song purchases from the iTunes store have remained steady at nearly $3.5 billion, even after the introduction of Apple Music. That is almost three times the revenue generation from streaming subscriptions.

The longtime producer and music industry insider Mr. Iovine has become the largest champion for streaming at Apple, pushing executives such as Mr. Cue, who oversees all of Apple’s Internet services, to invest more. Mr. Iovine holds no official title, be he’s responsible for the music product’s success. Last year, when Taylor Swift bashed Apple for not compensating artists enough for Apple Music, Mr. Iovine negotiated a truce. Swift now appears in ads for Apple.

Friction Inside Apple

Although Mr. Iovine’s connections make him valuable, they are also a source of friction inside Apple. Many times, when Apple was in the middle of negotiations with an artist’s managers and labels, unbeknownst to them, Mr. Iovine was carrying out his own separate discussions, according to people familiar with the matter.

Some of Beats employees found it difficult to cope in the new culture. All new product ideas require a laborious approval process, which includes sign-off from vice president Mr. Kondrk. While Apple sees the process as a necessary way to maintain quality, Beats employees considered it unnecessarily bureaucratic.

Many Beats executives left Apple, including former Beats Music Chief Executive Ian Rogers. He departed in August to become luxury giant LVMH SE’s group digital officer. Others who departed include product head Ryan Walsh; chief designer Ryan Goodman; vice president for engineering Bobby Gaza and senior visual Jackie Ngo. After the shift onto products such as iBooks and the App Store against their will, some engineers left as well. Even though the terms of the deal stated financial incentives for employees to stay for at least a year, Ms. Ngo, Mr. Goodman and others left inside just a few months, even before the unveil of Apple Music. Several longer-term Apple employees left as well during the reorganization.

While tension in an organization can be healthy, acquisitions often result in people leaving. This is especially true when a smaller startup joins a huge company. According to an Apple executive close to the culture clash, the combustion was intentional, an attempt to throw together different people to create something groundbreaking.

In June, the results will be on display at the developers conference. This will mark the one-year anniversary of Apple Music.

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