There were doubts that Apple's (NASDAQ: AAPL) "Spring Forward" event would even happen in light of the global chip shortage. But it did happen, and to be sure, not everything Apple announced had to do with silicon-hungry hardware.
Sure Apple unveiled new iMacs and iPads powered by the latest generation of Apple silicon. The company even unveiled its brand new AirTag system, a tracking system primarily aimed at helping you find your keys. But one key announcement all but escaped the notice of tech writers and the blogosphere.
At the event, Apple announced its plans to launch a podcast subscription service, which will launch in 170 regions and is expected to debut as soon as next month.
The move will undoubtedly raise the stakes in the ongoing podcast wars, as both Apple and Spotify (NYSE: SPOT) battle for new content to attract the ears of new listeners. Apple will take 30% of what creators earn through subscriptions in the first year while reducing its cut to 15% thereafter. Using this pricing model, Apple seems to be incentivizing creators to stick with its platform for the long term.
Apple has given few, if any way, for creators to monetize their content in the past. Ahead of the event, speculation had been that any new subscription service would mainly promote Apple's own original content. However, it seems Apple has finally caught on to the opportunity involved here. Creators make the content, which saves Apple millions in production costs. In the meantime, Apple sits back and collects its share of subscription fees.
While Apple's approach, in this case, may be different, its strategy remains the same. For the past few years, the crux of Apple has aimed to improve its digital services to keep consumers and content creators alike locked into the Apple ecosystem. And it's an approach that's paid off for Apple. Last year the company managed to pull $16 billion from its digital services business, a 25% increase year-over-year.
But Apple's success at improving its ecosystem has not been without controversy. Time and time again, Apple has been power to sway consumers away from competing apps. Competing apps like Spotify. Last summer, complaints from the Swedish streaming giant culminated in a probe by E.U. regulators into Apple's supposedly monopolistic practices.
But it's not like Spotify has shied away from competing with Apple. In 2019 Spotify began its podcast push in earnest, signing exclusive deals with the likes of Michelle Obama and Joe Rogan. Since that time, Spotify has managed to erode Apple's once unquestionable dominance in the podcast space.
In fact, according to eMarketer, 2021 will be the year when Spotify finally overtakes Apple in terms of listeners. The research firm estimates that 28 million people will listen through Apple podcasts this year, while 28.2 million will use Spotify.
Oddly enough, Spotify will launch its own nearly identical podcast subscription service next month. Does Apple's planned launch of its subscription service amount to a coincidence?
It seems unlikely.