Apple Inc. (AAPL) is planning to bring down the cost of streaming service from $10 per month after receiving lukewarm response from the users. The company which acquired Beats Music and Electronics for $3 billion is now planning to cut on the cost, according to Re/Code Co-Executive Editor, Kara Swisher, who recently talked to Jon Fortt on CNBC about music streaming industry and the cost structure.
Limited market with many players
In the interview, Swisher said that the Cupertino California-based company now realizes that many people are reluctant to pay $10 monthly subscription fee. According to Swisher, there is a limited market for streaming business, but competitors are in abundance including big names such as Pandora and Spotify. She said that Apple is in discussion with the market majors over the rights and features to bring down the cost as much as possible.
Fortt mentioned that Apple has already established itself as an easy resort for the recording companies, as albums can be downloaded through the iTunes. He was not clear if Apple is trying to allure the consumers from cheaper streaming option towards the costlier ones.
Swisher said that downloads are declining and has gone down by as much as 12% or so because users are not interested in listening their music this way. Swisher said that people do not want to buy music anymore. “They want to have the streaming service and so Apple sees the writing on the wall, they see the client sales and download and by the way the physical music is just going to collapse, but so is the download business.” She said that the company will have to offer a streaming service at a price that goes well with the consumer.
A big task for Apple
Fortt talked about Amazon.com Inc’s tussle with the publisher as the company wants to bring down the price. Apple is also walking the same road and hoping same from the recording industry, according to Fortt. However, according to him this is not going to be welcomed by the recording companies.
Swisher, also, said that it is quite possible that recording companies will not agree over Apple Inc.’s proposal of price reduction. She said that these companies are present for over decades and due to their reluctance in bringing down the price, earning profits for companies like Pandora is getting tougher.