A couple of months ago, Spotify announced that they were working on a paid hi-fi tier to launch later this year. Spotify is actively seeking ways to increase profitability of its large pool of active users, and hi-fi looked like one way to do that. Seemingly simultaneously, Apple and Amazon were campaigning to the labels (who ultimately dictate streaming pricing) that they wanted to promote lossless quality options as a way to increase the overall number of people streaming, rather than as some incremental upsell. Apple and Amazon’s negotiations evidently succeeded and so both Apple Music and Amazon Music HD will be offering lossless at no extra cost. Apple and Amazon are able to focus on growing subscriber counts because they can afford to aggressively subsidise their streaming divisions. In contrast, Spotify is an independent company and draws all of its income from that subscription price. Therefore, it is much more sensitive to things like ARPU. Making hi-fi a commodity feature is not what Spotify wanted to happen.
In addition to the ruthless war of competitive business, I also think Apple recognises that lossless is a very niche thing. Similar to the App Store Small Business Program, lossless-as-free is a huge win for Apple in goodwill with very little associated cost to the company. It’s an attractive feature on paper but I doubt many people will ever stream Apple Music lossless in practice. Beyond just issues of bandwidth, I’d guess less than one percent of Apple Music subscribers actually have premium audio equipment that can reproduce the additional details found in lossless music compared to standard Apple Music AAC encoded tracks. This is reflected in the fact that streaming lossless will be an entirely opt-in feature.
The spatial audio tracks with Dolby Atmos is going to have a more meaningful impact on users. This will be on by default and can be experienced by the millions of AirPods owners. Apple says it will stream Atmos songs to any Apple or Beats headphones with the H1 or W1 chip, although I’m sure certain models (like AirPods Max) will do a better job at creating a 3D soundstage than others. Interestingly, Spatial Audio for video content specifically requires AirPods Pro or AirPods Max. I think the difference is that the latter uses the gyroscope and accelerometers to position the music relative to your iPhone or iPad. Apple Music won’t try to do relative positioning, and so the simulation of Dolby Atmos surround sound is purely done by the headphones themselves. This also means that any third-party headphones that tout Dolby Atmos support can also benefit.