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Apple “not in it [music] for the money “ – Tim Cook

I have a piece coming out this week in the Harvard Business Review. It looks at the challenge before African entrepreneurs as we find space in a world dominated by ICT utilities like Google, Uber, Facebook and Twitter.  A new interview by Apple CEO, Tim Cook, reveals something interesting: it is always hard to compete against empires that make great products which are also largely free or heavily discounted.

According to Mr. Cook, Apple is “not in it [music streaming business] for the money." Apple can afford that because it has hundreds of billions of dollars of cash on hand. This explains the challenge before Spotify and other entities which operate in the music streaming sector.

Tim Cook: […] Music is a service that we think our users want us to provide. It’s a service that we worry about the humanity being drained out of. We worry about it becoming a bits-and-bytes kind of world, instead of the art and craft.

You’re right, we’re not in it for the money. I think it’s important for artists. If we’re going to continue to have a great creative community, [artists] have to be funded

This goes beyond Apple. When the marginal cost of scaling a business goes near-zero, the scalable advantage goes high. For great digital companies like Google, Apple and Facebook, that capacity to add users without breaking the bank becomes a moat which many would struggle to challenge. So, when ICT utilities go into sectors not to make money, it simply means they want to take market share.  And with the financial might in their disposals, they build unassailable competitive capabilities.

The implication is that unless these firms can innovate for the world, we may enter the era of innovation paralysis. Yes, no matter how you see it, when a big firm like Apple can enter a new sector not to make money, the sector would suffer, as innovation would be stalled as not many small firms would even bother to participate.