Is Apple Really Trying To Stop Spotify From Streaming Free Music?
Apple Inc. (NASDAQ: AAPL) is reportedly pushing music labels to stop Spotify from streaming free, ad-supported music. If true, Apple could be looking to diminish the service's user base, which includes more than 45 million free listeners and more than 15 million paid subscribers.
Global Equities Research analyst Trip Chowdhry said he does not know if Apple is trying to do that. But he is not a fan of free services.
"Nothing can be free forever," Chowdhry told Benzinga. "Either you pay for advertisement or you pay for subscription. The days of doing free stuff is almost over. We have seen the results from many companies. Basically, what free says is, your product is so damn bad, nobody will buy it."
Chowdhry said that free services will have more users, but he's still against the concept. He said that if consumers aren't willing to work for free, why should they expect to take the work of others without paying?
"I don't think companies can live off the charities of shareholders," he said. "I think this is a natural progression of realization that free is not an option. You also have to have a product that's so good people are willing to pay at least $0.99."
Related Link: Apple's 'Massive' Quarter Shows The Company Is A 'Juggernaut Across The Board'
'You Gotta Prove It's Actually True'
Sean Udall, CIO of Quantum Trading Strategies and author of The TechStrat Report, wasn't quick to believe the report on Apple's behind-the-scenes behavior.
"You gotta prove that it's actually true," Udall told Benzinga. "I don't think Apple would secretly work behind the scenes to kill all free streaming music. It doesn't make sense, especially since they're putting more efforts into iTunes Radio. Everything I hear is with the Beats subscription, you're gonna have a free and paid version of that."
According to The Verge, one music industry source referred to Apple as a "cutthroat" organization. Udall was not bothered by this assessment.
"Businesses are in the business to make money, and if you're not somewhat cutthroat, you'll get run over," he said. "I've never once said Apple isn't somewhat cutthroat."
Udall might accept Apple's behavior while doubting the validity of the report, but he said he would be "flat-out mad" if Apple kills ad-supported music.
"I think that'd be a mistake," said Udall.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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