WWDC: Apple announces rival service to Spotify, Pandora

WWDC: Apple announces rival service to Spotify, Pandora

New Apple Music subscription service costs $9.99 a month, meant to stem erosion of iTunes purchase model, blunt efforts of rival streaming services. Tuesday markets trade flat.

Apple WWDC 2015 logo.
Apple's World Wide Developers Conference is on this week in San Francisco.

SAN FRANCISCO, June 9, 2015 – At the opening of Apple’s annual World Wide Developers Conference here Monday, Apple dropped a long-expected product bomb on streaming music services like Spotify and Pandora, announcing the rollout of its “Apple Music” offering.

Apple’s new streaming subscription product, which launches officially on June 30, will cost individual users $9.99 a month. Alternatively, $14.99 will buy users a family plan that that will require the use of “iCloud Family Sharing” after the conclusion of a 3-month trial period.

Taking a page out of Microsoft’s old playbook, Apple Music will initially be available only on Apple platforms. Android users will have to wait until sometime this fall to access the new service.

Jimmy Iovine, one of Beats’ founders and now with Apple, explained the move this way: “Online music has become a complicated mess of apps, services and websites. Apple Music brings the best features together for an experience every music lover will appreciate.” That will likely be the case, once the inevitable new product hiccups fade into the background.

When Apple made its surprise $3 billion acquisition last year of Beats Music, including that small company’s well-regarded headphone product and its own streaming music service, analysts quickly concluded that the real prize in the transaction was the latter service.

Beats Music provided an instant online platform that Apple could mold into its own image and likeness, shortening the company’s path toward making a competitive – if late – entry in the music streaming space.

The increasing popularity and ease of use of subscription based, unlimited streaming models for distributing music had begun to seriously cramp the bottom line of Apple’s more mature iTunes point-of-sale music purchase service.

Now, Apple Music gets the personal computer and consumer products giant back into the game it arguably started years ago with the launch of it iPod music storage and playback device.

Apple’s new, highly-personalized, highly-configurable streaming music service will also offer user-customizable playlists, one or more “radio stations,” personality interviews and shows, and the ability for performers to upload their own audio and video files.

In other company news, Apple has already announced the successor to Yosemite, the current iteration of OS X for the Mac. In keeping with the current California motif, Apple said the next version of this Unix-based OS, dubbed “El Capitan,” will be available sometime this fall but provided few details other than improvements in search capabilities.

watchOS, the Apple Watch operating system will also get an update that will integrate that product more tightly with the rest of Apple’s product line while giving developers an easier path to support the product.

iOS 9 for iPhones and iPads will also improve the user experience, particularly by making the Siri search system more user friendly and proactive. The new OS will also make multitasking capabilities available for the first time to iPad users while adding a virtual trackpad feature as well.

On the Apple Pay front, Apple announced it’s working together with Square to develop a device that will ease the path for small businesses wishing to adopt the new pay service. Apple Pay will also be available in the UK beginning in July.

More announcements are slated to come during this year’s conference. But Apple Music, at least at the moment, would appear to be the company’s “next big thing.”

Today’s Trading Tips

As is generally the case on Wall Street, big Apple product announcements are always an excuse for some traders to dump the stock, and Monday was no exception. Apple shares (symbol: AAPL) were off about one percent and are down another one-plus percent today. This predictable patch of action is often a good time to pick up Apple shares. But then again, in 2015, nothing at all appears to be close to a sure thing.

Pandora Media shares (P) have fared far worse thus far, down nearly six percent between Monday’s close and Tuesday morning trading action.

The U.S. stock market itself has been caught for weeks now in a nasty, churning pattern with an over all negative bias, and Tuesday morning’s trading is no exception. The Dow and S&P 500 are nominally up as of 11 a.m. EDT, while the tech-heavy NASDAQ, where Apple is a big influence, is down modestly along with many tech stocks.

The market’s trend will likely be choppy-to-down all summer with Greek and Fed fear dominating action on declining volume. However, the charts tell us we could be in for at least a small oversold bounce some time this week. That might be a good chance to exit weak positions or even take some profits off the table if you have any.

That’s what we plan to do. We have already exited our small position in Forest City (FCE/A), a developer transforming into a REIT. We acquired the shares in a secondary that company issued last month, and sold them this morning for a mediocre profit—which, at the end of the day, is better than no profit at all.

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Terry Ponick
Biographical Note: Dateline Award-winning music and theater critic for The Connection Newspapers and the Reston-Fairfax Times, Terry was the music critic for the Washington Times print edition (1994-2010) and online Communities (2010-2014). Since 2014, he has been the Business and Entertainment Editor for Communities Digital News (CDN). A former stockbroker and a writer and editor with many interests, he served as editor under contract from the White House Office of Science and Technology Policy (OSTP) and continues to write on science and business topics. He is a graduate of Georgetown University (BA, MA) and the University of South Carolina where he was awarded a Ph.D. in English and American Literature and co-founded one of the earliest Writing Labs in the country. Twitter: @terryp17