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Apple is buying Beats because moving iTunes to streaming is risky

May 23 2014, 4:39am CDT | by , in Rumors | Apple

Apple is buying Beats because moving iTunes to streaming is risky
Andrew Burton/ Getty Images

According to TechCrunch, Apple will be offering two music services in the future: a streaming service (Beats Music) and a downloads-only service (iTunes).

Last month, we wrote about the rumor surrounding Apple's plan to overhaul its iTunes music service. Revenues were not doing good for Apple, and an Android version of iTunes sounded like the perfect solution.

But the angle shifted when news about Apple's billion-dollar deal with Beats Electronics surfaced earlier this month. What was Apple thinking? Apart from selling headphones, Beats also launched its music service this year.

Apple could have just modified iTunes into a streaming service instead of forking money - its biggest acquisition yet - to buy Beats.

A new report from TechCrunch offers an answer.

While the deal is an acquihire, Apple reportedly bought Beats because it didn't want to disrupt the music business.

Sources with knowledge of Apple's iTunes strategy said that Apple found it easier to offer a separate music service (Beats Music) while retaining its profiting iTunes business, than damage its existing deals with record labels and artists by turning iTunes into a streaming-only service.

 

In short, Apple doesn't want to deal with the risks involved in changing its iTunes service. After all, artists and record labels are earning well from downloads every year.

Given the case, Apple could retain iTunes as its milking cow for music downloads while Beats Music, or whatever Apple wishes to call it in the future, will help the company fight rising music streaming services like Spotify and Pandora.

Apple declined to comment on the report. 

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