Apple, Spotify subscription battle heats up at SXSW
Music and tech fans are making their annual pilgrimage to Austin, Texas, this week for the South By Southwest (SXSW) festival. What began 30 years ago as a showcase for local musicians has morphed into a must attend event for startup entrepreneurs and musical talent alike.
“The way they’ve structured the festival is pretty genius,” Canadian-born entrepreneur and musician Jared Gutstadt told BNN in a phone interview. Gutstadt -- president, chief creative officer and co-founder of audio creative agency Jingle Punks -- is a long-time SXSW attendee. This year, his firm will be marketing its partnership with iHeartRadio to create radio jingles on behalf of brands.
“In the past, musicians like me would come down to Austin just to get in front of people and have their music heard. If I was coming with a band now, I would be more interested in all the business opportunities, particularly on the tech side.”
Indeed, rival tech players betting big on music — such as Spotify, Google, Pandora and Amazon — are all known for having a presence on the ground during the festival. Beyond some of its traditional festival activities, Spotify this year teamed up with SXSW to curate music from artists who are performing at SXSW, both through Spotify and through the SXSW GO app.
Apple’s subscription service, Apple Music, will also have a presence again this year, with creative director Zane Lowe slated to deliver one of the festival’s keynote speakers. Lowe is well known for his hosting work on Apple’s global radio station Beats 1. It’s expected Beats 1 will be broadcasting from SXSW at its Apple Music House, a lounge style environment for the connected crowd. Some of the other Beats 1 personalities expected in Austin are hosts Julie Adenuga, Matt Wilkinson and Ebro Darden.
“Apple is closing the gap with Spotify,” Gene Munster, managing partner of venture capital firm Loup Ventures, told BNN in an email. Munster previously covered Apple’s stock as an analyst with brokerage firm Piper Jaffray.
Apple’s battle with Spotify comes as a growing number of music fans chose streaming over purchasing songs through services like iTunes. According to research firm Nielsen, music streaming in the U.S. overtook digital sales last year for the first time. In total, 431 billion songs were streamed (a number which includes audio and video), up from 317 billion in 2015 and 106 billion in 2013.
Apple, which is also in the midst of rolling out its first original TV productions through Apple Music, now has 25 million subscribers, according to an estimate from Loup Ventures. That would be up significantly from the 20 million subscribers Apple said it had as of December. By comparison, Spotify recently said it now has 50 million paid subscribers, an impressive increase since March of 2011, when it first announced it had reached the one million mark. Like Apple, Spotify has also prioritized video content.
“Apple knows consumers want a single plan for music and video streaming,” Munster told BNN. “They're ramping up their presence at SXSW because they're ready to add video alongside the current music offering over the next five years and try to win over Spotify users in the process.”