It looks like Apple is going to get into the internet radio business. You’ll never believe what their going to call it. Yeah, I know: iRadio. Pretty fucking obvious. But it isn’t just the name that’s obvious. The idea is obvious. Apple will only be about the hundredth company to enter the field. And here’s the thing. They could conceivably blow away the competition. And then years from now everyone would think that Apple invented internet radio. Just like they think about everything else that Apple is famous for but didn’t do any core work creating.
Matt Yglesias suggests that Apple will indeed blow away the competition. Why? Because they don’t have to make money at it. This is an idea that, for reasons that escape me, thrills him. He makes the same argument about Amazon delivering fresh groceries. I think the problem is that he is not seeing that capitalism only works for us all if there is competition. In the long run, if Amazon or Apple create a monopoly, they will strengthen their position through political influence and raise prices. Because, as I say again and again and again, prices are not based upon manufacturing costs.
The problem with iRadio is more than just the possibility that it will destroy the smaller companies. For one thing, I’m not at all clear that will happen. And that highlights the bigger problem. Apple makes fine hardware. In general, it doesn’t offer good value. The Apple brand costs far more than it’s worth. But in general, you won’t be disappointed in their hardware. The problem is with their software. It is of surprisingly low quality. And nowhere is that seen more than in iTunes. So I assume that iRadio will be a bloated pig that is more focused on licensing issues than usefulness.
There’s no doubt that iRadio will be successful. As far as I can tell, there is no product so bad that a large fraction of Apple users won’t love it. But I have great doubts about it knocking all the competition out of the way. Rocco Pendola over at The Street wrote a great defense of Pandora, that looks at the problem from a whole different perspective. Primarily, he argues that Pandora has been in this business for 13 years—from the beginning. But more important:
The truth is, if Apple could do that, they wouldn’t. It isn’t the kind of company they are. Again: I’m not slamming Apple in a general way. They are an excellent hardware company. And I think they would be a better company overall if consumers would get past their brand obsessions. But my guess is that just like with most Apple products, I will be able to get along just fine without iRadio.