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Frank Ocean heats up the battle between Apple and Spotify

Frank Ocean's newest album,
Frank Ocean's newest album, "Blonde," is the most recent high-profile album to be released exclusively on Apple Music. It's also just the latest part of the ongoing battle between Apple and Spotify.
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The release of Frank Ocean's album, "Blonde," is just the latest chapter in the ongoing fight between Apple and Spotify.

Spotify and Apple are two of the big players in the music streaming world. While Spotify has about twice as many paid subscribers, Apple is gaining fast and has some advantages when it comes to marketing. And that may be why Ocean ultimately decided to debut his much-anticipated album exclusively on Apple Music.

To get the latest on the battle between music streaming services, Frame senior producer Oscar Garza caught up with Lucas Shaw. He’s an entertainment and media reporter for Bloomberg News, and he explained the history of the tenuous relationship between Apple and Spotify, as well as why certain artists are driving the companies further apart.

Interview Highlights:

What exactly are Apple and Spotify fighting over now?

That would be for exclusive music. Apple introduced Apple Music last summer and in the year-plus since then it has emerged as the clear competitor to Spotify, which is the largest paid streaming music service in the world.

And central to Apple's strategy in adding users — beyond being pre-installed on hundreds of millions of phones around the world — is exclusive deals with top artists like Drake, Chance the Rapper and, most recently, Frank Ocean.

Spotify has routinely decried this practice, saying it's bad for the industry — that's in part because it does limit the availability of an album, and it's in part because these exclusives seem to have enabled Apple to catch up to Spotify very quickly.

But all these albums do end up on Spotify eventually, right?

Most of them do. Some artists, like Taylor Swift, are demanding that Spotify limit their new music to its paid tier. Spotify customers have a free option, which has advertising and most of the music, and a paid option with access to any music you can think of, and there are no ads.

But Spotify, to date, has refused to do [offer exclusives], and so they've missed out on some music. But most music goes on Spotify, whether it's after a week, or three weeks, or five months.

Apple Music has grown its subscriber base to about 15 million users. That's about half as many subscribers that Spotify has. But is Apple growing at a rate that has Spotify worried?

Yeah, I think that's the bigger concern. I think one of Spotify's executives said last week that they're up to 39 million subscribers, while Apple's at 15 million. But Spotify got to 39 million in eight or nine years, while Apple's gotten almost halfway there in little over a year. So that's what concerns Spotify.

And, Apple Music is part of Apple, which is the biggest, or most valuable, company in the world, and has a lot of money to pour into this venture and to compete with Spotify, which is private and depends exclusively on music to make money. Apple makes most of its money selling iPhones, iPads and other gadgets.

Is there any evidence that Apple is converting Spotify subscribers to its music service?

Most of the people in the music industry I've spoken with believe that Apple has brought in new customers to pay for music — rather than stealing from Spotify. It's just expanding the paid universe. That being said, even before Apple Music launched, Spotify has both publicly and privately accused Apple of anti-competitive practices.

Thanks to iTunes, Apple was once the most powerful player in the music business. The music industry was really scared about piracy at the time. Steve Jobs convinced all the labels to sign up to iTunes, and then iTunes became the dominant way that people interacted with music.

Spotify's been a threat to Apple because Spotify has in many ways replaced iTunes, it's a surrogate for ownership, and Spotify sees Apple trying to reclaim its dominant position and is worried about it doing so, because Spotify doesn't actually make any money yet.

Spotify doesn't make any money? 

Spotify generates about a little over a billion dollars in revenue, but it's not profitable and its losses have expanded. Because of the way these music services are structured, because of how much money they have to pay back to rights-holders, it becomes really hard for an independent music service to be profitable on its own.

That's why you see a couple of the biggest players in music, YouTube and now Apple Music — subsidiaries of big tech companies — that view music as a way of selling other things. Spotify doesn't have that luxury. Music is its way of selling music, and until it can figure out how to make money, it's always going to be in a precarious position.

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