Beats Music Aims To Take Streaming Mass Market

Posted: Jan 12 2014, 9:46am CST | by


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Beats Music Aims To Take Streaming Mass Market
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Beats Electronics, the fashion headphone behemoth led by Jimmy Iovine and Dr. Dre, has officially announced its plans to launch a music streaming service in the U.S. on January 21. Dubbed Beats Music, the $10 per month subscription service will enter an already crowded field. Major brands like Apple, Google and Sony, each offer an on-demand music subscription and Internet startup Spotify, despite its small size, attracts 6 million paying listeners worldwide, and several times that with its free ad-supported subscription. Beats has chosen to forgo the freemium business model. All of its users must pay the monthly subscription fee, although there will be a free trial period.

The move by Beats into the streaming market has been long anticipated. In 2012, Beats Electronics bought the music subscription service Mog, with executives stating their intention to build an “end-to-end” music service. From a features standpoint, Beats Music doesn’t appear to offer much that’s new. Users who know exactly what they want to hear can choose from the same 20 million song catalog that competing services have licensed from the major record labels. You can download tracks for offline listening across multiple devices. Like other paid subscription offerings, there are no ads to interrupt the music. The mobile app will work with iOS, Android and Windows Phone devices. The primary audience, however, is clearly those looking for the ease of automated playlists. These users can personalize their song selection by adding specific artists or genres to their profile, follow other Beats Music users and rate songs with a thumbs up/down equivalent. Users can share their playlists both in the app and via Facebook and Twitter. These features will be familiar to users of current streaming services.

Something that is new is a feature called Right Now. It enables users to get a custom mix after telling the app where they are, what they’re doing, who they’re doing it with and what music they’re in the mood for. The interface is much less cumbersome than the description makes it sound, and until the novelty wears off, this might be a fun way to get some insight into the app’s music recommendation proclivities. But a large part of the appeal of a song recommendation service is that it requires little to no effort on the part of the user. Indeed, Pandora, the leading online streaming radio service, has amassed its large following of 72 million plus active listeners primarily because it delivers songs that people like with no user input beyond a thumbs up, thumbs down or song skip. Answering four questions to get a good playlist seems a bit of a chore. And telling your smartphone app where you are seems overly redundant.

While Beats executives are taking every opportunity to mock the reliance of its competitors on song-selection algorithms, the truth is that they are also using software to drive song selection. It would simply be impractical not to. Beats claims that by adding human curatorial oversight – they’ve hired a slew of music experts to oversee playlists – they can eliminate faulty matches and better simulate the DJ-like experience of being served up both favorites and new material you wouldn’t have found otherwise. But in seeking to deliver an improved listening experience, Beats Music may be looking to solve a problem that doesn’t exist. Spotify has a devoted legion of users who’ve embraced the rental model of consuming as much on-demand music as they want, for a low, $10 monthly fee. Users who prefer a hands-off radio-style approach have found little to complain about with Pandora’s algorithms.

This may all be irrelevant to the success of Beats, however. The Beats By Dre headphone maker didn’t explode into an industry-dominant player, with more than $1 billion in revenue, by producing better headphones. Audiophiles, in fact, have long decried their sound quality. What Beats did was create a brand identity that an unserved, overlooked population (fashion-conscious teens and young adults) has continuously been willing to pay a premium for. They created a product, hyped by the street cred of celebrity endorsements, that people simply wanted to have.

Following a similar game plan, the rollout of Beats Music will easily be the most mainstream pitch yet for streaming music. There’s the tie-in with the Beats By Dre brand, of course, with Billboard reporting that the company is offering vouchers for free trials in its line of headphone and speaker gear. The New York Times writes that regular plugs on the daytime “Ellen Degeneres Show” are forthcoming, alongside in-store promotions at Target. And there will be a Super Bowl ad as well. With a reported $60 million investment behind it, Beats Music isn’t playing small ball. A deal with AT&T will allow that company’s Family Plan subscribers to try the service free for 90 days, with the option of then paying $15 per month for Beats Music access by up to five family members. And with both Jimmy Iovine and Dr. Dre’s ties to the music industry – significantly closer than any of its competitors – you can expect a slew of artist endorsements, especially in the form of celebrity playlists.

Beats is betting its success, not on peeling off customers from existing services with radically improved features, as much as growing the streaming market by a significant margin. With music download sales declining for the first time since the launch of iTunes, the music industry has ample motivation to see streaming service expand beyond its tech-savvy, largely male demographic. The Beats Music paid-only model is thought to mean higher royalties for the record companies, though no one is divulging licensing terms. Targeting a mainstream audience is an obvious move. The key question is whether that audience is willing to pay $10 a month. Of course, back in 2008, no one thought people would pay $200 for headphones to plug into their phones.

Source: Forbes

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