The Road to Apple?

A
Beats Music Primer
Reports from Music Allys
daily bulletins, 2011-2014
Introduction
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This week, the Financial Times claimed that Apple was in late-stage talks to buy Beats
Electronics and its Beats Music streaming service for $3.2bn, sending tongues wagging
throughout the technology and music industries alike.
At Music Ally, weve been tracking Beats Music since the days when Beats was just a
headphones brand: initially as it bought streaming service MOG, then as it revealed plans
for Project Daisy, which later became Beats Music.
As context for this weeks speculation, we thought it might be helpful to draw together our
coverage so far. The stories that follow (in chronological order) are all taken from our daily
news bulletin part of our subscription service for the music industry.
We hope this is useful: its the raw stories, typos (and occasionally-unfounded rumours)
included. And if it appeals, how about a two-month free trial to our subscription service?
Were running a no-strings promotion at the moment: you get our daily bulletin and weekly
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hassle to make you continue. You can sign up here.
This story is developing, of course, and well be covering those developments over the
coming days and weeks.
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The Road to Apple? A Beats Music Primer
11 October 2011
Dr Dre wants to 'take over everything with a speaker'
Hip-hop producer Dr Dre has been into consumer electronics for a long time now, most
notably with Beats Electronics. The company recently took a huge investment from HTC,
with its audio technology and headphones now being bundled with that manufacturer's
smartphones. GlobalGrind has an interview with Dre in which he talks about that deal and
a separate partnership with Chrysler. "We just signed a major deal with HTC and we have
cell phones coming out in the next two weeks. I am involved in Chrysler; we are in cars
right now. My whole thing is to take over everything with a speaker. That is what I am
shooting for." What's more, Dre isn't worried about competition in the gadget space. "Oh
nah, I am not nervous about anything! I am trying to be number 2 to Apple, and number 2
to Apple is not a bad position to be in..."
Source: GlobalGrind - http://tinyurl.com/699qzkv
2 July 2012
Beats Electronics buys MOG
An acquisition of streaming music service MOG by headphones rm Beats Electronics has
been rumoured for some time. Now it's o"cial. "Our whole reason for starting Beats was
to try to bring emotion back into that experience. We believe music services is a vital part
of that ecosystem," Beats CEO Luke Wood tells USA Today, which broke the news. "Time
will tell exactly how we integrate our products and services," adds MOG boss David
Hyman.
In several ways, Beats and MOG are a good match. For example, MOG was one of the
rst streaming services to make audio quality a key feature. It's also been early into
devices like televisions and cars -"They understand that the consumer wants ubiquity,"
says Wood. Beats is buying a platform and team rather than a big base of paying
subscribers though: recent reports have pegged MOG's userbase at 500k, although that
gure includes free users.
What's most interesting is the wider ownership structure of MOG now it's been bought.
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Beats is majority-owned by device-maker HTC, which paid $300m for a 51% share in the
company in AUgust 2011. HTC could give MOG a well-funded global push including
preloading the service on its smartphones and tablets -the deal that Beyond Oblivion was
so keen to do last year, but ultimately failed. Worth remembering, too, is the fact that
Universal Music Group has a minority stake in Beats.
Join the discussion - http://tinyurl.com/77jhmj3
4 July 2012
Fire sale! Beats bought MOG for just $14m
More details have emerged on the acquisition of streaming music service MOG by Beats
Electronics, including the price.Beats' majority shareholder HTC revealed in a note to
investors that Beats paid just $14m for MOG, a company that had raised $33m in its
lifetime as an independent service.
Meanwhile, the company is being split in two, with Beats buying MOG's streaming music
service, but leaving its music blog network and advertising platform as an independent
entity. How valuable those elements are is open to question though: MOG certainly hasn't
made much noise about them in the last year or so, preferring to focus on its partnerships
with the automotive industry on streaming.
What about MOG's licensing deals, though? Speculation is swirling around their likely
renegotiation due to the change in ownership, even if Beats' o"cial line is that "MOG the
music service and the rights they retain will remain the same today as they were last week
pre-aqusition".
All eyes -as ever -will be on Universal Music Group, whose position as a stakeholder in
Beats will inuence not only its own approach to MOG going forward, but also that of its
rivals.
Join the discussion - http://tinyurl.com/cfuuoql
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23 July 2012
Beats buys back 25% of its shares in deal 'realignment'
Last year, HTC invested $300m in audio technology rm Beats Electronics. Is the
company regretting that deal? Possibly: it has just sold 25% of the overall shares back
toBeats in what it's describing as "a realignment of their business agreement that
providesBeats with more exibility for global expansion while maintaining HTC's major
stake and commercial exclusivity in mobile". Beats now owns 75% of its shares, with HTC
owning the other 25%. What this means for Beats' newly-acquired MOG subsidiary is
unclear: that acquisition was expected to spark some kind of preload deal for MOG on
HTC devices in the near future.
Source: VentureBeat - http://tinyurl.com/chsucvv
30 August 2012
Next up for Beats: A smartphone, a TV and an iTunes rival?
Headphones rm Beats made waves with its recent acquisition of streaming music service
Mog, but it seems the company's ambitions stretch some way beyond that. Boy Genius
Report a tech site with a good record on these kinds of leaks/scoops claims that Beats
is working with part-owner HTC on a Beats-branded Android smartphone, but also with
Samsung on a Beats-branded television. Oh, and also "Beats is creating an iTunes-like
service code-named Daisy, and it will also feature a subscription-based model for music
streaming". None of the rms mentioned is commenting on the record for now. The
smartphone and Daisy rumours make more sense than the TV one, although some kind of
partnership to put Beats technology in Samsung sets is more believable.
Source: Boy Genius Report - http://tinyurl.com/co84ztq
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11 December 2012
Trent Reznor reveals Beats-backed Daisy streaming music service
Nine Inch Nails' Trent Reznor has been working with audio rm Beats for a little while now,
teasing fans with the promise that "a number of very interesting projects that will start to
emerge next year it's probably not what you're expecting!" earlier this year (Bulletin, 17-
Oct-12). True, unless what they were expecting was a recommendations-focused
streaming music service called Daisy.
During an interview with the New Yorker, Reznor revealed some details about the plans,
including the fact that Daisy is expected to launch early in 2013, and "uses mathematics
to o$er suggestions to the listener [but also] would present choices based partly on
suggestions made by connoisseurs, making it a platform in which the machine and the
human would collide more intimately."
He also compares Daisy to Spotify: "Here's sixteen million licensed pieces of music,
theyve said, but youre not stumbling into anything. What's missing is a service that adds
a layer of intelligent curation." Of course, the interview was presumably given before
Spotify's announcement last week of precisely that: a new layer for its service of intelligent
curation from artists, DJs and music experts.
In fact, the roots of 'intelligent' digital music curation go back a fairly long way Nokia's
Music Recommenders initiative from 2006 springs to mind. Beats and Reznor combined
should certainly have the pulling power to sign up some interesting curators, but it's fair to
wonder whether Daisy will reach a niche audience compared to curation built on top of
Spotify, Deezer and other large streaming services.
Join the discussion - http://tinyurl.com/bsf8ket
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10 January 2013
Beats poaches Rogers and makes strategic investment in Topspin for artist-friendly
streaming service
Last year, Nine Inch Nails' Trent Reznor revealed he was working with Beats on a
streaming music service called Daisy, to launch in 2013. Now it has a CEO: Ian Rogers.
Yes, that Ian Rogers, poached from his current role as boss of direct-to-fan company
Topspin, having previously worked in music roles for Yahoo, Mediacode and Grand Royal.
"Im jumping up and down excited to be able to share that Im taking on the role of CEO of
the project currently known as 'Daisy'," wrote Rogers in a personal blog post published
today, with Beats announcing the news in a conference call with journalists this evening.
Note: we're on that conference call now, so check our separate live post for other details
of what Beats is announcing tonight.
Rogers isn't leaving Topspin in the lurch: Beats is making a strategic investment in
Topspin, including a partnership to "provide a direct connection to artists inside the
coming service".
He'll also stay on as executive chairman and a member of Topspin's board of directors,
replaced as CEO by current COO Jeremy Bellinghausen. In his post, Rogers says
Topspin's revenues grew by 50% in 2012, indicating continued growth for the company's
business.
But wait: a direct connection to artists inside Daisy? This is where the story gets really
interesting, and genuinely disruptive for established digital music services like Spotify,
Rhapsody and Deezer.
"This is an enormous opportunity for Topspin to take the approach weve pioneered with
MTV, YouTube, and the ArtistLink API generally and set the gold standard for how artists
can be integrated into consumer music services," wrote Rogers.
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"This is the next step in the evolution of the way fans nd the music they love and connect
directly with the artists who make it. I am stoked and fortunate to get to be a part of it."
Throughout 2012 there was an increasingly heated debate about streaming music services
and artists, with a number of the latter disenchanted not just with their payouts from
streamed songs, but with the lack of opportunities to work directly with those streaming
services, and connect directly with fans using them.
Both Spotify and Deezer are reaching out to artists on the latter count the payouts are
out of their hands with Spotify keen for artists to act as curators on its service, while
Deezer is kicking o$ a similar Deezer for Artists initiative. Rival Rdio has gone further,
promising to pay artists commission when fans they lead to its service sign up for
subscriptions.
There is still an opportunity for somebody to become the artist-friendly streaming music
service, though, which is clearly what Daisy is angling for.
It already has the infrastructure required to run a streaming service thanks to Beats'
purchase of Mog last July, but Rogers' appointment gives it genuine credibility on the
artist-friendly criteria too along with Reznor's involvement as chief creative o"cer, and
the involvement of Dr Dre and Jimmy Iovine higher up the food chain within Beats.
There are big challenges ahead: licensing costs and the marketing required to reach a
scale to compete with Spotify and whatever Apple has planned for iTunes' evolution. It's
unclear how Beats' relationship with HTC is spinning out in relation to Mog (and
nowDaisy), too.
Still, these questions are what make Daisy such an intriguing service and which
presumably attracted Rogers to the role. "Im sure you can appreciate my desire to get
back in the game building music services for fans," he wrote in the blog post.
"When I left Yahoo! to join Topspin in April of 2008 I was frustrated by the resistance I was
meeting from the labels; I felt I was trying to help and my help wasnt welcome. Times
have changed, though, and as Rob Wells at Universal Music Group points out in a
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conversation we had a year ago, the future health of the industry is dependent on getting
these services to scale."
Another quote springs to mind from a recent Wired prole of Rogers, published at the end
of 2012, in which he's asked about the signicant time and money it took Spotify to launch
in the US:
"It shouldnt be that hard. The fact that it has cost them that much money to get to where
they are is not their fault. Its the industrys fault. The industry has stood in the way of
building something the industry needs."
Now Daisy. 2013 suddenly got a lot more interesting.
11 January 2013
Daisy CEO Ian Rogers: 'Our mission here is to win'
By now, you'll have hopefully seen our Alert mailout last night on the appointment of
Topspin's Ian Rogers as CEO of Daisy, the upcoming subscription music service from
Beats. After we broke the news, we sat in on a conference call with Rogers and Beats
CEO Jimmy Iovine to get some more details on plans for the service, which also has Nine
Inch Nails' Trent Reznor as its chief creative o"cer.
Some facts: Daisy isn't likely to launch until the second half of 2013; pricing hasn't yet
been nalised; but the service will be, in Rogers' words: "Mobile-rst: iOS, Android,
Windows 8 but also desktop". Beats COO Luke Wood added that Daisy will be global and
"in as many territories as humanly possible", with Rogers adding a bullish note: "Our
mission here is to win, and to win we need to be global."
Separately, Topspin's Bob Moczydlowsky blogged about how his company's integration
with Daisy will work: "Topspin GoDirect will become the way the Daisy service gets
photos, videos and products from artists, and both companies will work together to make
sure fans see those products when they listen to songs." Something we were hoping for in
the 'Artist Power' section of our 2013 Preview report earlier this week, incidentally.
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One bone to pick with Daisy is its rhetoric around competitors, with Iovine claiming "Right
now, these things are all utilities: Give me your credit card, heres 12m songs, and good
luck," and Rogers saying Daisy users are "not just going to get a search box". That's
deliberately ignoring the fact that Spotify for one a.) clearly understands this problem too
and b.) has talked in a lot more depth than Daisy about its plans to make curation and
discovery much more central to its service.
This battle isn't about a brand-new curatorial paradigm competing against a nerdy search
box, in other words, even if it's understandable why Beats and Daisy want to frame it that
way in advance of their launch. The ght between Daisy and Spotify (and Deezer and
Rhapsody and Xbox Music and) is much more interesting than that, as they try to take
music subscriptions into the mainstream.
Join the discussion - http://tinyurl.com/aadxrk3
13 February 2013
Beats' Jimmy Iovine still sees 'no curation' in streaming music
Beats is hoping to launch its new Daisy streaming music service this summer rather than
towards the end of 2013, according to chairman Jimmy Iovine. Yet in his latest public
appearance at the Dive Into Media conference, it seems he wasn't challenged about on
his ongoing claims that rival services don't do music curation.
"There is a sea of music, an ocean of music and absolutely no curation for it. You friends
can't curate for you. No one knows what song comes next," said Iovine, according to
CNET. "Most tech companies never get curation right. It's not in their culture. We will be
miles ahead of them. If you are going to the gym ve days a week, we know that, and
when you wake up we will have a list for you"
And this is interesting, and exciting, but Iovine's rhetoric continues to wilfully ignore the
major e$orts already going into human-led curation from those rival streaming services.
Which is savvy marketing, perhaps, but leaves us still wondering what Daisy's REAL
di$erentiator will be.
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This battle isn't 'curation v no-curation', it's more a ght to gure out the best forms of
curation, to put the right playlists in front of users, and to puzzle out the di$ering discovery
needs of music geeks and mainstream consumers. Beats' entry into the market has plenty
of potential on all these counts, but the more Iovine promises, the higher expectations will
be when Daisy launches in the summer.
Join the discussion - http://tinyurl.com/clz83uv
6 March 2013
Beats spins o! Daisy with $60m funding led by Access Industries
Beats' decision to spin o$ its in-development streaming music service Daisy as a separate
company isn't a surprise, nor is its decision to raise $60m of funding to do it. The lead
investor may be more of a shock though: Access Industries. Yes, the same Access
Industries, founded by Len Blavatnik, which both owns Warner Music Group and invested
$130m in streaming service Deezer just ve months ago, in October 2012.
Access isn't the sole investor in Beats' new round: billionaires Marc Rowan, James Packer
and Lee Bass are also chipping in. But it's Blavatnik's involvement and the fact that
Daisy and Deezer now share a common investor that's most interesting. "Beats has the
vision, the brand, the management team and now the investor group to e$ectively change
the expectations and experiences of a music subscription service," says Blavatnik in a
statement.
More so than Deezer? It's a fascinating move, not least because of the WMG connection.
Labels taking stakes in digital services is hardly a new phenomenon, but we're intrigued
by the dynamics of WMG's owner having a major, solo stake in two prominent streaming
services. The funding announcement also reiterates a "late 2013" launch date for Daisy,
with "music discovery" still being agged up as its key innovation. Oh, and a separate
report by Reuters claims that Beats' Jimmy Iovine recently met Apple CEO Tim Cook and
services boss Eddy Cue to tell them more about Daisy, with a "potential partnership" in the
air, just to add a little more spice to today's news.
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The news also reminds us of the money pouring into streaming music, despite the chatter
a couple of years ago that businesses requiring licences were a mug's game for investors.
Rounds of $130m for Deezer, $100m for Spotify and now $60m for Daisy, with Google
and Apple lurking in the wings with their own well-resourced streaming plans.
Rightsholders will cheer in the short term, naturally, but how many pockets will be deep
enough to stay in this streaming race for the long term?
Join the discussion http://tinyurl.com/czs5tlm
9 July 2013
AT&T bundling could get Beats' Daisy o! to a running start
When Beats announced its plans for a streaming music service named Daisy earlier this
year, the emphasis was on music discovery features as a way to stand out from the crowd
(Bulletin, 11-Jan-13). At the time, we thought there'd have to be more in its arsenal than
that, with every other streaming service also ramping up on discovery. Now we know what
else Beats may be bringing to the party: a high-prole bundling deal with US telco AT&T.
CNET reported yesterday that Beats boss Jimmy Iovine has been "in talks with top execs
from the major music labels and AT&T" about bundling Daisy with AT&T's data plans,
giving people a limited free trial then upselling them to paid subscriptions. "On the table
now, sources say, is how much free music to o$er and who would eat the costs," claims
the report. Questions that may take some time to be answered to everyone's satisfaction,
although the report warns that other telcos could be in the running for the bundling deal.
While such a partnership would get Daisy o$ to a running start when it launches later in
the year, it's not a new idea. Rhapsody and Verizon Wireless were working together back
in 2008 in the US on a joint music service, for example (Bulletin, 1-Jul-08), while more
recently Rhapsody inked a deal with AT&T to enable the latter's customers to pay for its
service through their mobile bills (Bulletin, 21-Dec-12). Meanwhile, Mog now owned by
Beats and forming the basis for Daisy was pre-installed on several of AT&T's rst 4G
smartphones in 2011 (Bulletin, 8-Nov-11).
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Reports that Beats is looking to update and expand this partnership in 2013 will ensure
that rivals including Rhapsody, Spotify and Rdio redouble their e$orts to land a big US
telco bundling deal. Key questions: are they all shooting for simple trial-then-subscribe
distribution? Or is 2013 the year when the big telcos will look at the growth of Muve Music
on their smaller rival Cricket Wireless 1.1m subscribers and counting and strike a
more-ambitious deal to bundle the cost of a streaming subscription into tari$s on a longer-
term basis?
Join the discussion http://tinyurl.com/oyaspvp
22 July 2013
Pieces falling into place for Beats Music streaming service
Beats announced plans for its 'Project Daisy' streaming music service earlier this year, but
we're starting to wonder if it'll actually be called Beats Music. That's certainly the name of
the sub-company listed on LinkedIn by employees of the new service, and it's also the
name being used on its recruitment site. "We are Beats Music, the brainchild of music
industry visionaries Jimmy Iovine and Trent Reznor," it explains. "We realize the heart and
inspiration it takes to craft music and cherish the connection between the artist and the
listener. Musical taste is complex, evolving, and unique. We believe that hearing the right
music at the right time enriches your life. It's why we're here: to deliver musical bliss and
move culture." The company is hiring iOS, Android and Windows developers among other
roles. Meanwhile, a quick browse of those LinkedIn proles reveals that Pulselocker co-
founder and CTO Ryan Walsh has joined Beats Music as director of product strategy, with
other hires drawn from Yahoo, Pandora and (unsurprisingly) MOG, the streaming service
acquired by Beats to form the basis of its new o$ering.
Source: Beats Music http://tinyurl.com/m7ha3ps
Source: LinkedIn http://tinyurl.com/mgdbs7f
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1 August 2013
Beats rumoured to be on course for $1.4bn of revenues this year
Fast Company's claim that headphones-maker Beats is on course to generate $1.4bn of
revenues this year is based on a single source (albeit a "knowledgable" one), so caution is
advised. The source also claims that Beats has now sold between 15m and 20m of its
premium-priced headphones, and that its revenues may have quadrupled since 2011.
There's no speculation on how those 2013 revenues are likely to a$ect the company's
protability. But what's important here from a Music Ally perspective, of course, is the
likely war-chest for the launch of Beats Music ('Project Daisy') later in the year. Beats'
booming hardware business will be subsidising the licensing and marketing costs of its
new streaming music service, making it a potentially-formidable competitor for the likes of
Spotify, Deezer and Rdio, as well as services from bigger tech rms like Google, Microsoft
and Sony.
Source: Fast Company http://tinyurl.com/n8oaogv
8 August 2013
Beats Music hires Julie Pilat for curation and artist development role
Preparations for the launch of the Beats Music streaming service continue, with news that
Clear Channel executive Julie Pilat has joined the company to focus on musiccuration and
artist development. She'll be heading a "team of music experts" to provide
recommendations and curated channels on the service, which is expected to launch later
this year. "Its about an art for connecting and giving them what they want," she tells
Billboard, promising to "bridge the gap between that 'tastemaker' audience and the
mainstream. And give a lot of music context". However, Pilat also appears to have
adapted fast to Beats' wilful (public) disregard for the curation e$orts going on at rival
services. "There aren't a lot of choices. If you know what you want to listen to, you pull it
up, but if you don't, you get stuck," she says, at a time when pretty much all those rivals
are investing heavily in improving their own recommendations and editorial curation
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Spotify's 'Browse' feature being the latest example. Still, Beats Music's launch should
provide even more competition on this score, which is good for users on all services.
Source: Billboard http://tinyurl.com/kr6edrt
12 August 2013
Beats Music 'coming soon' as curation team grows
Last month, we noted that Beats' 'Project Daisy' streaming service was likely to be called
Beats Music, based on recruitment text on its website (Bulletin, 22-Jul-13). Well, we were
right: that website's homepage changed on Friday to show the message 'Beats Music is
coming soon', inviting people to sign up with an email address and (US) mobile phone
number to be notied with news and updates. Could that hint at a US-only launch for the
streaming music service? A range of jobs are still advertised on the site for design and
engineering roles, including iOS and Android developers. Billboard has more details on
Beats Music's editorial team under newly-appointed head of music, curation and artist
development Julie Pilat (Bulletin, 8-Aug-13). It's a mixture of writers, radio programmers
and former Pitchfork Media editor-in-chief Scott Plagenhoef, emphasising the new
service's determination to make curation one of its key selling points.
Link https://beatsmusic.com/
Source: Billboard http://tinyurl.com/mozt2jm
19 August 2013
Beats reportedly wants out of HTC ahead of Beats Music launch
Beats Music is on the fundraising trail ahead of the launch later this year of its BeatsMusic
streaming service, according to the Wall Street Journal. It claims the company has been
trying (unsuccessfully so far) to raise "hundreds of millions of dollars" for acquisitions,
investment in the business and to buy out the 25% stake in the company held by
Taiwanese device-maker HTC. The report claims Beats tries to raise $700m from credit
markets to renance its debt and buy out HTC earlier this year, but that it is "now in talks
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with an investor that could provide debt nancing and possibly take a minority ownership
stake in the coming weeks". Despite its rapidly-growing headphones'n'hardware business
($1bn of revenues in 2012 according to the WSJ),Beats will be making signicant
investments in sta$, licensing and marketing for BeatsMusic's launch, while freeing itself
from HTC may give more scope for partnerships with other smartphone and tablet
makers. Beats sold 50.1% of its shares to HTC for $300m in 2011, then bought half of
them back last year.
Source: Wall Street Journal http://tinyurl.com/kcvu8r8
21 August 2013
Beats Music aims to 'avoid elitism' with curated playlists
Expect a drip-drip of leaks about Beats Music in the run-up to the new streaming service's
launch later in the year. GigaOm is latest at the tap with some information on the service's
playlist plans. It claims that musicians and freelance music writers have been creating
"thousands of playlists" the latter group in response to briefs from Beats' editorial team.
"Playlists can be based on the work of an artist, a genre, a year or even an activity, like
BBQing or working out," claims the report. "Freelancers are told to build these playlists for
certain archetypes of listeners, like the 40-year-old country fan or the teenage hip hop
listener, but also keep other factors in mind such as moods and activities done while
listening." There are also a few extracts from the training materials being used by Beats
with its freelancers. "Talking down to listeners is not desired. Avoid elitism," is one piece of
advice. "Avoid overly clever transitions or organizing principles that will be lost on the
average listener (unless the playlist itself is geared towards connoisseurs)." It's a clear sign
of Beats Music's desire to catch up to one of rival Spotify's big advantages its several-
years-worth of playlists.
Source: GigaOm http://tinyurl.com/m93d55f
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24 September 2013
Beats Music boss on frictionless Facebook sharing: 'Turn that shit o!'
An insight into the upcoming Beats Music service: it won't be pumping details of every
track users play to Facebook. That's according to a personal blog post by CEO Ian
Rogers, sparked by one too many of his Facebook contacts mistaking his daughter's
Sonos-via-Mog streams for his own tastes (i.e. Taylor Swift). It seems Rogers' concerns
about 'frictionless' Facebook sharing go further back though.
"This feature was always a bad idea. Its as if Instagram uploaded every photo you take
with your phone," he writes. "I cant wait for music services to stop doing this by default. I
promise you Beats Music will not do the 'barf everything you play on Facebook' bullshit. If
your music service is currently barng every track you play to Facebook, turn that shit o$."
He even provides instructions on how to do it for a range of services.
The serious point here: an ongoing move to smarter forms of sharing, with services
understanding which friends (or, indeed, strangers) people share tastes with, then
aggregating their habits in a smarter way to provide recommendations. Less about barng
every song you play to Facebook, and more about 'this album/artist is bubbling up among
the friends and tastemakers whose opinion matters to you'. Apps like Soundwave and
Discovr are exploring those ideas, as are other streaming services.
Join the discussion http://tinyurl.com/otlwleb
30 September 2013
Beats taking $500m investment from Carlyle Group as HTC bows out
With Beats thought to have generated more than $1bn of revenues from selling
headphones in 2012, the company is already building up a considerable war-chest to
launch its Beats Music streaming service later this year. Now the company has bolstered
its budget even more with a $500m investment from private equity rm Carlyle Group. Its
investment is for a "minority stake" according to the Wall Street Journal, and came as tech
rm HTC sold its 24.84% stake in Beats back to the company for $265m.
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At one point, the HTC partnership had been expected to drive Beats' growth through
incorporating its software into smartphones and tablets, but the former company has
struggled in the last couple of years against erce competition from Samsung in particular.
The WSJ suggests that Beats and HTC will continue working together, but HTC's exit from
the business is likely to open the way for more partnerships something that could be
particularly signicant for the rollout of Beats Music.
We're still awaiting rm details of that service's launch, including whether it happens this
year or slips to 2014. But news of the latest investment makes it clearer than ever that
streaming music is going to be an environment for the deepest-pocketed of technology
companies in 2014 and beyond.
Apple and Google's nancial might is obvious, and Sony and Microsoft may well be
putting more welly behind their services next year too. Rdio is now backed by radio group
Cumulus Media, Deezer by WMG's owner Access Industries, Pandora is raising up to
$279.4m by issuing new shares, and Spotify has been rumoured to be seeking debt
nancing at a valuation of $5.27bn. It's high stakes time for streaming music.
Join the discussion http://tinyurl.com/nq6wqpe
8 October 2013
More details on iTunes Radio and Beats Music rollout plans
Strap yourselves in: it's going to be a fascinating few months ahead for the musicindustry,
as Apple takes iTunes Radio beyond the US, and Beats launches its BeatsMusic service in
that country. More details on both companies' strategies emerged yesterday, in what's
starting to look like considered jockeying for position among the big beasts of the digital
music world.
We'll start with Apple, which is apparently hoping to launch iTunes Radio in the UK,
Canada, Australia and New Zealand by early 2014, with Scandinavian countries in the
frame for launches around the same time too. This is according to Bloomberg and the
regulation sources "who asked not to be identied because the plans arent public".
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Apple's global deals with labels are expected to fuel the expansion, with an early debut on
Spotify's stomping ground the most intriguing aspect.
How about Beats? President and COO Luke Wood tells TheNextWeb that it will
launchBeats Music in the US "within the next few months" as a service accessible as a
website plus iOS and Android apps. Wood also re-emphasises Beats Music's focus on
curation: "Were going to focus really heavily on playlists, because thats how we consume
musicand thats how most people consume music Were talking about real depth of
personalisation and knowing who I am, who you are, what were listening to, what we like,
what weve listened to before and then o$ering up music that is highly relevant to our taste
prole."
One takeaway from all of this is the increasingly blurred lines (sorry, Robin Thicke) between
previously-separate digital music categories. Beats Music may be an on-demand service,
but it looks like it will feel as much like a personal radio service, just with playlists rather
than stations. And, of course, Spotify has been moving in that direction too through its
acquisition of Tunigo and e$orts to ramp up playlist discovery. Nobody is just a 'search
box' in this world nowadays. The competition promises to be captivating.
Join the discussion http://tinyurl.com/njk2c2a
4 December 2013
Beats Music to launch in January in the US
Headphones manufacturer Beats was aiming to launch its Beats Music streaming service
this year, but has now conrmed that it will go live in the US in January. That's according
to Beats Music boss Ian Rogers, who blogged about the launch plans today.
"If youve spent any time around me in the past six months youve surely seen me buried
in my phone making playlists, poking, prodding, and testing our forthcoming service,Beats
Music," he wrote. "Sincere thanks to those who have been testing the private Alpha-
turned-Beta along with me. Were nearly ready for lifto$. Thanks to your diligent testing
and feedback we are locked and loaded, ready to launch here in the US in January, 2014."
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Music fans are being invited to reserve their usernames at the Beats Music website this
appears to be available to users globally, as the entry form's box for a US mobile number
is optional. Rogers doesn't shy away from the company's previous intentions to launch
Beats Music before Christmas, in his post.
"When I joined Beats Music in January Id expected wed get this out the door before the
end of the year. Thankfully I work with people who have patience and are more concerned
about getting Beats Music right than pushing it out the door. In retrospect weve
accomplished far more this year than Id imagined possible," he writes.
"Facts: Beats Music is real. Were in an internal, private beta with people who know and
love music (including a few of my personal heroes). Were providing a few artists and other
inuencers access to familiarize them with the service and get their early feedback. Were
making improvements based on that feedback. We cant wait to share it with the world,
and are set to launch in the US in January."
There is no news on launches elsewhere in the world as yet. Read our full story: including
context on how Beats has been building its music service in 2013, and its big ambitions
for curation and discovery, by clicking on the link below.
Link http://tinyurl.com/nkf2etd
5 December 2013
Will AT&T bundle get Beats Music o! to a running start in the US?
We reported yesterday on Beats Music's announcement that its streaming music service
will be launching in the US in January, although as yet there's no information on how
aggressively the company will be expanding globally. An interesting coda to the initial
news though: tech site GigaOm claims the launch WILL be accompanied by a partnership
with US telco AT&T, as had been previously rumoured.
"We can now conrm that this partnership is in fact in place, and it looks like Beats will be
launching out of the gate with support from AT&T, save for any last-minute hiccups,"
reports GigaOm, while warning that it doesn't yet know what form the bundle will take. In
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July, CNET claimed that Beats boss Jimmy Iovine was in discussions with labels and AT&T
to bundle Beats Music with the telco's data plans with a limited free trial converting to a
paid subscription.
"On the table now, sources say, is how much free music to o$er and who would eat the
costs," noted CNET's source at the time. It would be profoundly unsurprising if those
kinds of talks had dragged on long enough to delay the planned 2013 launch of
BeatsMusic until next year. The question now is how big an advantage an AT&T
partnership would provide for Beats Music in its early days. Telco deals come in many
avours, from listless marketing partnerships to hard bundles promoted aggressively to
customers.
A lot of people are watching the US closely to see which streaming music partners the big
telcos get into bed with, though. Cricket Wireless may be a small player, but the success
of its Muve Music has opened the door for bigger rivals to make their own moves in 2014.
"Hopefully 2014 will be the year when the US carriers really step up with subscription
services, and start to do these deals," Spotify's telco partnerships boss Michael Abbattista
told us in November, but if Beats does have its AT&T deal sewn up, Spotify will be
competing with Rhapsody, Deezer and others for business elsewhere.
Join the discussion http://tinyurl.com/nkf2etd
8 January 2014
Beats Music tipped for AT&T bundle and Super Bowl ads to blow Spotify out of the
water
We dont have long to wait for the US debut of the latest well-funded streaming service,
with the New York Post claiming Beats Music will go live before the Grammys awards on
26 January. It also claims that Beats will splash out millions of dollars on ads for its new
service around the Super Bowl, as well as in other media, backed by a bundling deal with
US telco AT&T. Finally, AT&T is going to do this, its going to be bundled, one source tells
the paper. Theyre going to try to blow Spotify out of the water, suggests another. The
story also includes a casual aside that Spotify is in talks with Verizon about a possible
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partnership, which would be a fascinating counter. Beats executives have talked a lot
about their plans to beat existing streaming services through editorial features careful
curation over search boxes but major marketing spend was always likely to be a factor
too, capitalising on the existing promotional activity around Beats headphones. All this,
with YouTube planning its own subscription music launch early this year too.
Source: New York Post http://tinyurl.com/p3j2o29
13 January 2014
Beats Music's launch recipe: curation, AT&T / Target deals and royalty promise
2014's rst new streaming music service has a launch date. Beats Music will go live on 21
January in the US across iOS, Android and Windows, according to a weekend
announcement neatly timed to avoid getting swamped by last week's CES tech trade
show. As predicted, the service will be a premium-only a$air at launch, although new
users will get a 30-day trial. Partnerships with telco AT&T and retailer Target will be key
parts of the launch for the $9.99-a-month service, as will the focus on curation thatBeats
execs have been promising for the last year. Will this be enough to make it stand out from
the competition?
The AT&T deal isn't the hard bundle that some hoped for. Instead, it's a family deal that
will see customers able to pay $14.99 a month for access for up to ve family members
across 10 devices. We've seen family plans before Rdio was a pioneer here butBeats
has snuck in ahead of Spotify and other rivals. That said, the AT&T exclusivity leaves the
way open for those services to roll out similar plans for a wider range of Americans, if they
see it as a bigger selling point than expected. The Target deal will give Beats some
mainstream shelf-space, albeit focused mainly around gift cards.
What else? There's an intriguing pitch for Beats Music as an "artist-friendly" service, with
the promise that the company "is committed to the principle that music has real value and
will be acting accordingly by paying the same royalty rate to all content owners major and
indie alike, while simultaneously providing a platform for fan interaction". What royalty rate
is that? It's not public at this stage, although as soon as the rst royalty statements land in
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artist inboxes, we're sure we'll be nding out. What's not mentioned in the launch
announcement is the Topspin merchandise tie-in announced a year ago: next week, we'll
nd out how that's working, particularly compared to the same company's partnership
with Spotify.
And then there's curation: the expected mix of playlists from experts on an impressive in-
house editorial team, but also a few surprises. Context will play a big role: BeatsMusic
users will get a new "personalised selection of albums and playlists" delivered four times a
day, as well as a "continuous playlist" based on asking each user four questions about
"their location, their activity, their surroundings, and their musical preference at that
moment". Context is something all the streaming services are working on, so Beats'
methods will be scrutinised closely. But with no free tier, the key task will be getting people
into that free-trial funnel to experience Beats Music for themselves. To channel Sherlock
Holmes for a moment: the game is on.
Join the discussion http://tinyurl.com/qah2wk9
14 January 2014
First impressions of Beats Musics web client
Beats Music is launching next week in the US, but GigaOm journalist Janko Roettgers
found his way in to a beta version of its website, and has published screenshots and rst
impressions. Big images for artist proles are one thing that jumps out (nobody mention
new Myspace!) but the piece focuses more on whats missing: no sign of the long-
promised Topspin merchandise tie-in; not many playlists created by artists although
launch partner Target does have an Exfoliating: Songs to scrub out to playlist; and no
lean-back radio-style option, with Beats collection of curated playlists seemingly taking
that role. Artist biographies are provided by Rovi, which may be a missed opportunity to
work with someone like BandPage to give artists control over how their bio reads on the
service. The caveat to all this, though, is that Beats Music hasnt launched yet: more
features and content may be added between now and 21 January.
Source: GigaOm http://tinyurl.com/owwcddm
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21 January 2014
Beats Music app goes live for iPhone ahead of today's launch
Later today, Beats Music will open its doors in the US, after a year of anticipation about
the prospects for the headphone brand's streaming music service. Ahead of the launch,
its iPhone app went live on Apple's App Store, giving a better look at how it's shaping up
for mobile users. There are few surprises: the app looks neatly designed with an emphasis
on personal recommendations, complete with the 'Right Now' contextual mode that
invites users to tell Beats Music what they're doing, where they're doing it and what they
might fancy listening to. "I'm at a party & feel like BBQing with my BFF to Dance-Pop" as
the example in the App Store screenshots shows. The screenshots also show o$ the
'Highlights' section with playlists from Beats' editorial team, and an artist prole for Bruce
Springsteen. Engadget has a fuller review of the app, and is impressed. We'll bring you our
thoughts tomorrow.
Source: App Store http://tinyurl.com/nujvvoe
Source: Engadget http://tinyurl.com/m4ltt3w
23 January 2014
Beats Music holds o! on new registrations, claiming heavy demand
Beats Music is a new, much-hyped music service available as a free app in the US with a
seven-day trial, so it's unsurprisingly getting a heavy demand from day one. Cue gremlins:
"Due to the extremely high volume of interest in our service some users are experiencing
issues. Most people are una$ected but our priority is to give everyone a great experience,"
wrote CEO Ian Rogers in a blog post last night. "We prepared for issues like these, have a
plan, and are going to hold o$ on letting more people in while we put this plan in action."
Anyone registering this week will have that initial trial doubled in length to 14 days. Rogers
also took to his own blog this week to respond to criticism ofBeats Music's lack of a free,
ad-supported tier. "If youre the kind of person who pays ~$1,000/year for cable and
refuse to spend ~$100/year on a great music service, you and I look at the world very
di$erently from one another," wrote Rogers. "If music, and a service that brings you great
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music experiences and playlists from everyone from Pitchfork to Downbeat to Mojo to
Thrasher isnt worth $100/year to you Im afraid we dont have much in common."
Source: Beats Music http://tinyurl.com/p2lvytv
Source: Ian Rogers http://tinyurl.com/okrd8pn
3 February 2014
Streaming music app downloads get compared by Distimo
The launch of Beats Music has spurred new interest in the streaming apps market from
analytics companies. We reported on App Annies latest research last week, but now rival
Distimo has published its own stats comparing some of the big streaming services
performance on iOS. It analysed downloads of the iOS apps for Pandora, Spotify,
Rdio,Beats Music and Deezer in the US, UK and Columbia, as well as MelOn and
KakaoMusic in South Korea, between 27 December 2013 and 27 January 2014. It makes
for interesting reading. In the US, Beats Music accounted for 23% of the total downloads
among these services in that period, compared to 46% for Pandora, 27% for Spotify and
4% for Rdio. In the UK, Spotify took an 81% share ahead of 15% for Deezer and 4% for
Rdio, while in Columbia, Spotify took 61% of downloads, Deezer 35% and Rdio 4% again.
Korea saw MelOn grab 37% versus KakaoMusics 62% of those two apps combined
downloads.
Source: Distimo http://tinyurl.com/pgfrn9p
7 February 2014
Merlin reveals refreshing and enlightened deal with Beats Music
Indie licensing body Merlin has had cross words for several streaming music services
down the years, when they launched without its repertoire. Beats Music, however, joins
Spotify in its good books. The pair revealed a licensing deal yesterday, although its been
active since Beats Musics launch on 21 January. Beats is brandishing the deal as another
step setting it above rivals: While other services may try to get away with paying
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independent labels and artists less, were paying all repertoire-owners equally because its
the right thing to do, said CEO Ian Rogers, while Merlin boss Charles Caldas hailed
Beats refreshing, and enlightened approach to recognising the value of a Merlin deal.
While its early days for Beats Music, the deal is likely to contribute to the growth of
Merlins collections for its indie members this year. At Midem, AIM/WIN boss Alison
Wenham said that Merlins collections will pass $80m last year, and it will probably double
that this year.
Source: Merlin
26 February 2014
Beats Music hires Dave Allen to advocate streaming to artists
"We want to be proactive, rather than reactive, in the discussion of where streaming
services sit at the intersection of artists and fans," Beats Music boss Ian Rogers told
Billboard last night, after announcing that the company has hired Dave Allen in an
advocacy role. That's Dave Allen of Gang of Four, and latterly of ad agency North one of
the more prominent pro-streaming musicians to have spoken out in recent times, including
a feature publicly disagreeing with David Byrne over streaming's impact on artists.
According to Billboard, he'll be responsible for 'conveying the economic benets of
streaming music to musicians who may be skeptical of how much money they can earn
from subscription music royalties' a comparable role to the one held at Spotify by
another musician, D.A. Wallach. Not everyone is happy though author Robert Levine
took to Twitter this morning to denounce the hiring as "a giant 'fuck you' to artists" on the
basis of Allen's past statements.
Source: Billboard http://tinyurl.com/msoxy2v
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5 March 2014
Beats Music buys Topspin to put our money where our mouth is
When D2C rm Topspin recently laid o$ a signicant number of sta$, it was presented as
a restructuring e$ort so the company could refocus on its ArtistLink platform. However,
rumours ever since have suggested that Topspin was in fact shopping itself to potential
buyers, indicating deeper business issues at the company. Yesterday, the acquisition
rumours came true: Beats Music has conrmed that it is buying Topspin for an
undisclosed amount (although several sources have told Music Ally the price is in the low
millions).
The deal is being presented in a positive light by Beats Music, which made Topspin
integration one of its key features at launch. The acquisition brings a team of talented
people who have spent years working on building and ne-tuning the artist-to-fan
connection into the Beats Music experience, wrote CEO Ian Rogers yesterday and as
the former CEO of Topspin, he knows the team better than most. Topspin + BeatsMusic
combines music discovery and direct relationships between artists and fans in a
revolutionary way.
Rogers said that the deal will mean no change to existing ArtistLink partnerships with MTV
and Spotify, with Topspin mirroring the promise: Both of these integrations will continue
to operate as-is after Beats Music acquires ArtistLink. Were sure Spotify is already
investigating alternative sources for the merchandise listings appearing within artist
proles on its service: even if Beats Music intends to honour Topspins agreement with
Spotify, passing data on merchandise sales to a direct competitor will not have been part
of Spotifys business plan.
Buying Topspin could be seen as a necessary move for Beats Music, keeping a key
partner from either going out of business or falling into the hands of a competitor like
Spotify. But Rogers made a persuasive case for the usefulness of having a D2C platform
in-house too. Were committed to establishing Beats Music as a conduit for the artist-fan
relationship, a platform where artists have a voice, and a provider of useful data and
analytics on how fans interact with artists and their music, he wrote yesterday. This
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acquisition puts our money where our mouth is. It will be interesting to see if it nudges
rival streaming services into exploring the prospect of putting their own money into other
D2C or analytics startups, as acquisitions.
Join the discussion http://tinyurl.com/nquvt98
10 March 2014
Beats Music opens its API
The streaming music arms race moves up a notch with the news that Beats Music is
opening its API to external developers. The timing of this is made all the more interesting
following Beats buying up Topspin last week only to be followed by Spotify buying The
Echo Nest. There are rumours that Spotify may close down access to The Echo Nests API
to other streaming music services in order to give it a key point of di$erentiation in the
market (while simultaneously swelling the value of the company). There is, therefore, an
element of symbolism that will be read into Beats timing of its announcement here.Beats
Music has already opened its API up to others on a conditional basis (such as Sonos and
Bop.fm) and this move is intended to get external developers on side as quickly as
possibly. "This isn't just about giving access to the catalogue of music," Ian Rogers, Beats
Musics chief executive told CNet. "This is about people who are subscribers to a premium
music service that has premium music features. As a subscriber you should have access
anywhere."
Source: CNet http://tinyurl.com/pfnx6da
12 March 2014
Beats Music raises up to $100m in new funding round
Beats Music is reported to have raised between $60m and $100m in a new round of
funding. This follows it raising $60m almost exactly a year ago. Billboard reports that
current investors including Jimmy Iovine, Dr Dre and Access Industries made the fresh
round of investment. The money may go towards high-prole advertising and marketing
activities as the company increasingly courts a mainstream consumer. This follows Beats
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acquiring Topspin last week and comes as rival Spotify went on its own spending spree,
acquiring The Echo Nest last week, and rumours of it securing a $200m credit facility as it
charges towards a possible IPO. While these services are locked in a high-prole struggle,
this ght will ultimately be decided not on who has the best service but rather who has the
deepest pockets.
Source: Billboard http://tinyurl.com/mus85t2
Source: Bloomberg http://tinyurl.com/nrer55n
21 March 2014
Leaked gures claim Beats Music signed up 28k paying subscribers in January
Beats Music launched in the US in January, but as yet hasn't released any o"cial gures
showing how popular it's been either in attracting free trialists or signing up paying
subscribers. That remains the case, but some gures have leaked out this week
seemingly via a presentation given to investors in February on the streaming service's
progress so far. Bloomberg published the stats yesterday, claiming that Beats
Musicsigned up around 28,000 paying subscribers in January before its partnership with
telco AT&T kicked in.
The article also claims that the latter deal "created a pipeline of 750,000 potential
subscribers who signed up for 30-day and 90-day free trials starting Jan. 31", and that "as
those trials end, more than 70 percent are converting to paid subscribers". That's a
surprisingly-high conversion rate, although given the timescales, Bloomberg's "people
with knowledge of the situation" are presumably referring to the people who signed up for
30-day trials in the rst week or two after Beats Music launched which may indicate that
they're the keenest users who'd be most likely to convert to paying subscribers.
It would be wise to wait until May when the rst 90-day trials have ended to get a more
accurate picture of how sticky Beats Music is once people have to stump up to keep
listening. That's why Billboard's suggestion that the reported gures "would translate to
roughly 525,000 new subscribers" generating $5.52m of monthly revenues for Beats
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Music is a little premature, as it's unknown how many of the 750,000 early adopters are on
90-day rather than 30-day trials.
The company is certainly ambitious, with Beats exec Jimmy Iovine having said in January
that "my rst goal is 500,000 people and well kill ourselves to get there". The RIAA said
earlier this week that the US ended 2013 with 6.1m paying subscribers formusic services,
so Beats Music has the chance to make a notable impact in 2014 even if its conversion
rate ultimately ends up somewhere south of the claimed 70%. Meanwhile the competition
with existing streaming services, including Beats' determination to throw serious money at
marketing, is also good news for the industry.
Join the discussion http://tinyurl.com/pqxcerk
4 April 2014
Equity rm Transon buys Topspin assets
Wait! Didnt Beats buy Topspin last month? Well, it did, but Transom Capital Group has
acquired the remainder of Topspins e-commerce and marketing assets after
Beatsscooped up Topspins core technology. It is understood that Transons deal includes
the actual Topspin platform, the Topspin name and its customer list of 35,000 acts.
Transom will now roll Topspin into two online retail and merchandise companies it already
merged back in February namely BandMerch and Cinder Block. As all three companies
operate in roughly the same area, it is understood they will merge Transformers-style
into a single D2F entity. Beats CEO (and former Topspin executive) Ian Rogers blogged
this about the deal, When Beats Music acquired Topspin last month, we noted that
Topspins e-commerce unit wasnt our core business, and as such wed be looking for a
partner to handle that element of the Topspin platform. He called Transom perfect home
for Topspin before adding (cryptically), Meanwhile, here at Beats Music were working on
some exciting things built on the Topspin Artistlink platform that well unveil in the coming
months. Stay tuned!
Source: Beats Music http://tinyurl.com/pkknqmk
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22 April 2014
Beats Music adds in-app subscriptions on iOS to boost conversion rate
Beats Music users can now pay for subscriptions from within its iPhone app, with the
company choosing to absorb Apple's 30% cut itself rather than pass the cost onto
subscribers. The latest update (1.07) adds a $9.99 in-app purchase option to pay for a
monthly subscription, managed through users' iTunes accounts. That means Beats will be
taking just under $7 per subscriber, with CEO Ian Rogers telling Recode that more than
half of the service's current users are on iPhones. Beats joins Rdio and Rhapsody in
selling in-app subscriptions on iOS in the US, while Deezer does it in Europe Spotify has
so far held out from following suit.
Rogers suggested the move is "what you do when you want subscribers" while taking
what sounds like another jab at Spotify: "If you dont care if people subscribe or not, and
youve got a free product, maybe then you wouldnt do it." But elsewhere, his company is
facing more questions about how well its service is doing after the initial trial period in the
US. Billboard characterises Beats Music's performance so far as a "bumpy start", quoting
music industry sources as suggesting it has paying subscribers "in the low six gures"
compared to Spotify's 2m+ in the US.
That said, there is clearly still support for Rogers and his boss Jimmy Iovine from
rightsholders keen to see subscription drive more value beyond 2014, with an emphasis
on this being a longer game. "Jimmy is nding out this is tougher than it looks. This
business takes time," says one. With a $60m-$100m funding round on the way for
BeatsMusic, and more mileage to be wrung out of its partnership with telco AT&T, it would
be foolish to write the service o$ based on its rst few months. For now, easier in-app
subscriptions plus a continued massive marketing spend are the strategy, rather than
boosting Beats Music's free tier as some labels are suggesting.
Join the discussion http://tinyurl.com/kensmpu
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28 April 2014
Beats Music downloads boosted in the US after adding in-app subscriptions
You wouldn't think that adding an in-app subscription option would drive a big spike in
downloads for a streaming music app. Nevertheless, Beats Music saw downloads of its
iOS app shoot up 427% the day after it added such an option last week, according to
mobile analytics rm Distimo. It's been comparing download gures between BeatsMusic
and rivals Rdio and Rhapsody: "By April 22, Beats Music accumulated more downloads
than the other two apps. Beats Musics share of the total downloads between the apps
went from a 44 percent share on April 18 to a 92 percent share on April 22," explained
Distimo in a blog post. However, when in-app revenues were compared again, just
between these three apps Rdio came top with 51%, ahead of Rhapsody's 33% and
Beats Music's 16%. Missing from these comparisons: Pandora and Spotify, which
according to Apple's US App Store chart are currently the second and third most popular
music apps by downloads on iOS there. Rdio is 29th and Rhapsody 77th, so take the 92%
share gure with a pinch of salt.
Source: Distimo http://tinyurl.com/m57hbt7
30 April 2014
US in focus: Spotify's Sprint deal, Beats up and runnin', and Deezer CEO change
Three separate stories today highlight the activity around streaming music in the US, in
what's looking like a crucial year for the recorded music industry there. First: Spotify
announced its already-leaked partnership with telco Sprint yesterday, with a music-
focused HTC smartphone. More importantly, there's a six-month free trial of Spotify for
people on Sprint's "Framily" (friends and family) tari$s, with varying discounts then kicking
in on subscriptions. Other Sprint customers are getting three-month trials of the service.
"Its the biggest deal weve ever done," said Spotify CEO Daniel Ek at the launch, with a
marketing push to Sprint's 54m customers on the way.
That deal will go head-to-head with Beats Music's partnership with another US telco,
AT&T. Beats Music CEO Ian Rogers has now responded to suggestions its launch was
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underwhelming with a blog post titled 100 Days And Runnin'. Among the stats: conversion
rates so far are 40% more than Beats' projections no, he didn't put a number to either
with 33% of those subscriptions coming through AT&T. Adding in-app purchases to Beats
Music's iOS app has boosted daily paid conversions by a factor of ve. The service has
generated 690 years of listening hours so far, with more than half of that listening coming
from curated playlists and the 'The Sentence' recommendations feature. Oh, and one in
four tracks played comes from an independent label.
The third story broke outside the US in France but with America a key factor. Deezer
CEO Axel Dauchez has announced plans to step down in September to, in his company's
words, "pursue a new professional opportunity". No news on a replacement yet, but
Deezer's US CEO Tyler Goldman is joining the company's management team, while
Deezer's announcement set Dauchez's departure in the context of "the internationalisation
of the company" specically mentioning its ambitions to launch in the US this year.
Deezer's choice of CEO now will provide a big hint on its likely strategy in the US,
especially with AT&T and Sprint now seemingly out of play for streaming partnerships.
Back to that notion of 2014 being a crucial year for the US music industry. Sales of
downloads tailed o$ faster than expected last year, reinforcing the desire of rightsholders
to ensure a healthily-growing and above all competitive ecosystem of subscription
streaming services this year. Streaming revenues rose 39% to $1.4bn in the US in 2013
according to the RIAA, as the number of paying subscribers jumped from 3.4m in 2012 to
6.1m at the end of last year. But rightsholders are looking for further strong growth in 2014
streaming was 21% of industry revenues last year in the US with telco deals, big-
budget marketing and intensifying competition key to those prospects. Spotify and Beats
are certainly up for the ght; the likes of Rdio, Google Play and soon Deezer retain an
interest; and Apple, Amazon and YouTube are lurking in the background. Exciting times
Stateside.
Join the discussion http://tinyurl.com/kgu47d8
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9 May 2014
Apple's plan to beat Spotify might be buying Beats for $3.2bn
Jimmy Iovine and Dr Dre as Apple employees reporting directly to CEO Tim Cook. Ian
Rogers as an Apple employee reporting to Eddy Cue. The idea of Apple buying
BeatsElectronics and its Beats Music service sounds like a far-fetched April Fool's story
from industry blogger Bob Lefsetz probably because it was, this year. Yet this is no joke:
the Financial Times claimed last night that Apple is on the verge of paying $3.2bn for
Beatsin a deal that could be announced "as early as next week".
The report claimed that the deal includes the Beats hardware brand and its spin-o$
streaming music service, while warning that "some details had yet to be agreed and talks
could still fall apart". Cook recently hinted that Apple was on the acquisition trail, telling
analysts that the company had bought 24 companies in the last 18 months, albeit none at
this scale. "That shows that we're on the prowl, I suppose you could say. We look for
companies that have great people and great technology and that t culturally, and we
don't have a rule that says we can't spend a lot."
There were earlier hints that make an Apple/Beats tie-up less shocking than it should be: a
Reuters report in March 2013 about Cook and Cue meeting Iovine to "nd out more"
about the streaming service then known as Project Daisy. The New York Post reported
yesterday that Iovine is in linked talks to join Apple as a "special adviser" to Cook on all
things creative his contract at Universal Music Group may be less of an obstacle if the
label group's stake in Beats was valued at the reported $400m as part of the acquisition.
But the real question, of course, is why Apple would buy Beats.
Apple wouldn't be making the acquisition blind: it sells Beats headphones in its stores and
will now be seeing the conversion rates for Beats Music (in the form of in-app purchases
for its iOS app) too. Opinions have been split on the main rationale though: plenty of
people were being rude online last night about Beats' headphones a familiar branding-
over-quality argument but plenty of others arguing that Apple already has the quality
factor nailed, but in 2014 is lacking the 'cool' factor that Beats has created around its
brand. It's a bring-your-prejudices speculation party on a global scale.
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Talk of Apple making a panic-buy due to music download sales falling faster than
expected last year, particularly in the US, also overestimate the importance of music to
Apple's business in 2014. Content remains a driver for sales of its hardware, and for a
while now the content that does that best has been apps rather than songs. Even
so,music remains culturally important to modern, post-iPod Apple. If the company simply
wanted a slick streaming app, it could probably have snapped up Rdio (and certainly
Bloom.fm) for a fraction of the price.
If the Beats deal goes through, it's a blend of branding, hardware+software+service
integration, and talent. See it as a sign of Apple's determination not to be outanked by
Spotify and Google/YouTube in particular in digital music's future. But now let's see if it
goes through.
Join the discussion http://tinyurl.com/lntvj52
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