Apple Music is coming, and I'm betting the mobile carriers are less than pleased. Today, European carrier Telia/Sonera showed its displeasure with a well-timed $115 million investment in Spotify, part of a $526 million round of new investment. And this conflict may blow up net neutrality again, in Europe at least.
The relationship between Apple and the carriers has always been fraught. They're extreme frenemies. Apple can buoy a carrier to great heights; AT&T grew strong enough on the back of the iPhone from 2007-2009 to throw Verizon into a panic. But Apple also takes away almost all control from its carriers, reducing them to their greatest nightmare: dumb pipes.
The tension between Apple and its carrier partners leaks into the products sometimes. Last year, Apple came up with a way to make it easier to switch carriers, the Apple SIM. It's in the iPad air 2 and iPad mini 3. AT&T then locked the Apple SIM so that if you activate your iPad on AT&T, you have to get a new SIM to switch carriers. This seems like a small thing, but every little drag on switching carriers benefits the carriers.
So now we get to Spotify.
TeliaSonera isn't just a carrier. It owns a massive fiber network that a lot of carriers use to transfer Internet data. (Carriers have lots of these deals with each other; the Sprint tower across the street from me was hooked to a Verizon landline connection for years.)
Net neutrality in Europe is mushier right now than the clear rules our FCC has laid out. This Business Insider story goes into great detail, but the upshot is that nothing is settled. (Meanwhile, over here, the FCC's rules could still be overturned by the courts.) TeliaSonera now has a clear path to offer a very smart pipe indeed: a differentiated Spotify service for European ISPs, perhaps with guaranteed service quality and carrier billing. With backbone services in countries like Germany and France, where it doesn't have retail operations, it would be a smart play to turn Spotify into a wholesale player rather than keep it for its own retail carriers.
TeliaSonera has backbone business in the U.S., too, and T-Mobile has led the way here in showing how carriers can anoint some music services as special with its "music freedom" plan, which lets you stream unlimited music from some music services (but not others.) So TeliaSonera can turn up the volume on Spotify in the U.S., too.
Apple Music is even more threatening to its competition than some of the company's other moves, because it isn't restricted to iOS. When it's available for Android phones this fall, it may not be the default music player, but there will be a powerful marketing campaign behind it.
I can see Spotify standing at the vanguard of the carrier forces, trying to prevent Apple from obtaining even more power over mobile customers. What will the carriers do? Subsidize Spotify subscriptions? Count Spotify out of data caps, but count Apple Music in? T-Mobile is already doing things like this with Rhapsody, and Sprint had a weak relationship with Spotify, but expect things to heat up later this year.
Carriers haven't been very good at promoting content services. Since they can't set the defaults on mobile devices, their chosen services often operate awkwardly or appear to be bloatware. But the battle lines are drawn. The war will start in earnest this fall. And we'll all, hopefully, get better music options for it.