By Dan Moren
April 27, 2016 6:47 AM PT
Apple’s “first” subscription service paves the way for more
As I was typing up the many statements of Tim Cook during yesterday’s quarterly financial call, one in particular—about Apple Music—caught my attention:
Tim: Feel good about success of Apple’s *first* subscription service. (emphasis added)— Six Colors liveblog (@sixcolorsevent) April 26, 2016
Even at the time it stood out to me—hence the added emphasis. It seemed like an odd thing for the usually cautious Cook to say.
Who’s on first?
Many people responded to say that clearly Apple Music wasn’t the company’s first subscription service. What about iCloud? iTunes Match? Mobile Me? Dot Mac?
True enough, those are all subscription services—but they aren’t really what Cook was talking about. None of those were marquee services designed to be products in and of themselves. Rather they were ancillaries for those who had already bought into the Apple ecosystem. People don’t buy an iPhone or Mac because of iCloud, but if Apple and Cook have their way, people will buy into the ecosystem to get Apple Music. 1
That’s not to say that Apple Music isn’t still about selling some devices, but there’s a reason that one of the major thrusts of this quarter’s call was about services. Apple’s realized that it can’t purely depend on growth in device sales: sometimes device sales weaken; staggering growth doesn’t last forever. Building up a robust services platform keeps recurring revenue coming in even when sales dip.
What’s on second?
But, of course, what I was really focusing on in the quote above is first. First subscription service. Because, to my mind, why say “first” if you don’t have a “second” and a “third” coming down the pipe? (And if you’re going to claim that this was a slip of the tongue, well, I suppose that’s possible, but not very likely given the careful choreography that Cook and Maestri usually practice.)
Rumors have, of course, long suggested that Apple will get into the subscription TV (and possibly movie) business, especially as everybody and their dog has entered the market. Apple hasn’t quite gotten this locked down yet: negotiations with the major content providers have stalled repeatedly, though all involved seem to believe that an Apple service is inevitable; it just remains to be seen what such a service looks like. Meanwhile, rumors also say that Apple is going to produce its own video content as well, putting it up with the likes of Amazon, Hulu, and Netflix.
I’m pretty confident that an Apple subscription TV service will materialize—and I’m on the record as enthusiastic about the idea if Apple can bring some of its trademark elegance and design to the arena. Though from what we’ve seen of Apple Music, that’s hardly a a foregone conclusion. Or, as our friend and colleague Joe Rosensteel put it:
I don’t want to harsh anyone’s mellow about Cook’s “1st subscription service” remark but if the 2nd is “TV & Movies” they better step it up…— Joe Rosensteel (@joesteel) April 26, 2016
So can Apple learn from its travails with Apple Music and deliver a quality TV and movie subscription service? Honestly, I don’t know. 2
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