5 business lessons from Google and Apple's foray into the music industry

With Google’s recent foray into online music space, Apple finds itself face-to-face with its first serious rival in years. Here are five lessons that both companies can teach us about the industry.

1. Don’t get complacent

There’s a reason we’re talking about Apple and Google’s dominance of the online music market. Not that long ago, if you could lap your market-share competitors, Apple would’ve done.

In a post-Napster world, as the music industry struggled to protect their cashflow, Steve Jobs was one of the few people who saw the major label racket for the problem it was. Why should people pay for a whole album when they only want one song? The consumer was being forced to pay for music they didn’t want in order to have access to what they did want.

Separating individual songs from the album package was an inspired move that enabled Apple to devour the market.

However, the new king immediately erected his city walls. iTunes stuck defiantly to its horrible interface, controversial DRM model (more on that later), and a 99p-per-song formula even as newer models proved more advantageous to consumers and their new devices.

It wasn’t until a competitor as well-financed as Google stepped up to the plate that Apple realized its mistake. Like the record-label execs of yore, they’d become complacent with the model that was working so well for them, blind to the changes happening around them. It was an uncharacteristic misstep for a company renowned for setting the status-quo.

2. Give your customers freedom

Apple makes great products and if you’re going to lock people into a limited back-and-forth between software and hardware then you have to. The only reason Apple survived a tactic that would’ve folded a lesser company was the strength of their products.

At first, with little else to choose from, few took issue committing fully to Apple products. The company’s strict Digital Rights Management (DRM) set-up propelled it up the NASDAQ index.

In the long-term, however, people began to resent the company’s tyrannical control over their paid-for devices and media. After more than a decade in the works, a lawsuit comprising of 8 million affected customers is finally underway.

Turns out people don’t like paying for ketchup and then being told they can’t put it on anything but chips. Your customers should feel like they want to use your service, not that they have no choice.

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Braveheart, business lessons

If you try to take someone's freedom, this guy will show up on your doorstep[/caption]

3. Keep your business ventures linked

There is some solid theory behind Apple’s practical mistakes. iTunes was expected to capitalize on the release of the iPod some eight months later, and it didn’t disappoint.

Demand for music streaming services is skyrocketing. As the owners of the two leading mobile operating systems Apple and Google hold a distinct advantage over their competitors.

Every iOS or Android phone sold over the coming years will come pre-installed with the iTunes or Google Play app, providing the kind of exposure that their competitors can only dream of. When expanding into a new market, it always helps to build on a pre-existing client base.

4. Don’t always look inward for inspiration

It doesn’t matter how good you are at what you do, somewhere there’s somebody doing it, or at least part of it, better.

In response to Google’s buyout of Songza, Apple recently forked out $3 billion (£1.9 billion) for the Beats Music streaming service (their largest acquisition to date). Apple knows it has a fight on their hands given all the ex-iTunes users making the transition to Play. Without a Steve Jobs in the company, however, they’re forced to look outside of their own borders.

5. Never underestimate the human touch

Despite the success of Pandora and Spotify’s algorithms, the current limits of code are perhaps highlighted by Google’s decision to utilise the input of very human DJs, musicians, critics, and even ethnomusicologists into Play’s curated streaming. Beats Music currently does the same thing, and Apple are unlikely to change that.

Algorithms can be wonderful things, but the smartest guys in the room know when they’re not working. There are some jobs that code will always do better, but it may never (at least in our lifetimes) be able to compete with people on others. It’s essential for the modern CEO to hire accordingly.

by Nick Rojas, business consultant and writer, check out his Twitter @NickARojas.