Beats Music has joined the ranks of pioneering—and suffering—streaming-music pioneers such as Rdio, Spotify, Rhapsody, Deezer and Pandora, promising to mix things up by, well, literally mixing things up. Unlike some of its competitors, Beats Music is infused with Dr. Dre’s star power and industry know-how, with a heavy emphasis on playlists made by humans with good taste instead of smart algorithms.
Streaming music services are flailing. Crushed by the licensing fees that the music industry charges for use of its music, Beats Music competitors like Spotify and Pandora are struggling just to boost revenues—never mind turn a profit.
On the surface, Beats Music looks like more of the same—streaming, on-demand music with an emphasis on curation. Can industry-savvy Dr. Dre succeed where others are set to fail?
Crazily enough, he just might.
Music Insider DNA
Beats Music is the first software experiment to spring out of Dre’s Beats brand, which is best known for its iconic headphones by the same name. (Beyond headphones, Beats branding has appeared on everything from HTC smartphones to HP laptops since the brand launched in 2008.)
Beats may be synonymous with Dre, but consider two other important players calling the shots for Beats Music: its co-creator Jimmy Iovine, the founder of Interscope records, and its “chief creative officer,” Nine Inch Nails frontman and vocal industry critic Trent Reznor. (Beats Electronics President Luke Wood is in the mix too.)
That founding trifecta alone puts Beats Music on an altogether different trajectory than its rivals—one that could turn the tide for the struggling model of streaming subscription services. In spite of their major record label deals, competitor services like Spotify and Rdio embody a techie, start-up spirit, and a result they come across as music-industry outsiders, more aligned with Silicon Valley than the recording industry.
So if the co-founders of Skype can’t crack the nut, maybe it's time to see if a trio that’s been living and breathing the recording industry for decades can.
Streaming Music That's Worth Paying For
Technology-wise, Beats Music is a remix of MOG, which Beats acquired in 2012 and will shut down on April 15. The service is mobile-first, with Android and iOS apps leading the charge. Beats Music will also play nice with Sonos home stereo systems out of the gate. (You can use the service on the Web too, though it’s decidedly pared down—and less fun—than the mobile app.)
The app itself is slick and easy to navigate, with a heavy emphasis on curated music discovery instead of the more hunt-and-peck system of some on-demand services. So far, the app’s hand-picked playlists and fun suggestion engines feel smarter and hipper than Pandora’s internet radio formula. (If I ever hear Coldplay again on one of my Pandora stations, I’m officially quitting cold turkey.)
If Beats Music’s groundwork looks right, what’s the business plan exactly? For starters, Beats won’t offer an ad-supported, free tier—an established model that Pandora, for one, has relied on for years. Beats Music offers a 7-day free trial, and then the walls go up. For the standard $10 a month, you can bring them down again. Through an official partnership, eligible AT&T subscribers can sign up for a longer 3-month trial and subscribe to a shared Beats Music family plan of sorts.
While Beats won’t go into the specifics of artist payouts (yet, anyway), Dre and co. appear to be counting on their deep industry ties to stave off the onslaught of pissed-off musicians. And their similarly deep pockets should do plenty to keep it afloat while they figure the rest out.
Paid Consumers Culled From The Mainstream
Beats Music’s staunchly anti-ad position is a smart one. For years now, people have streamed music for free. Streaming services are hemorrhaging cash to pump music to all of those ad-supported subscribers, who feel unmoved to pay a subscription fee for music they’re getting for free. Instead of offering a premium tier, Beats Music is sending listeners a message: streaming music is a premium service—one we should all be paying for. Paid subscribers are the holy grail of streaming music revenue ... but how to find more of them?
While Spotify and its ilk cast wider, more expensive nets to reel in much-needed paid users and balance that free-to-paid subscriber ratio, Beats will basically launch with 100% paid users from day one. (Well, day eight, at least.) And it has big plans to convert the masses into paid streaming subscribers.
Beats Music’s premium message will be broadcast to the mainstream in a Super Bowl commercial—the biggest, loudest megaphone around. Mainstream tastemaker Ellen DeGeneres will also promote Beats Music on her talk show. The pie could get a lot bigger. And to make licensing expenses make sense for anyone, it has to.
Smartly, Beats is gunning for the “prosumer” streaming-music demographic, much the way its wildly popular Beats headphones targeted a similar market, and continue to sell like hotcakes in spite of their high price tag and sonic inferiority. Between courting the mainstream and bringing major record industry experience to the table, Beats could succeed where others have failed: finally establishing streaming music as the luxury it is—and like all luxuries, it’s worth shelling out for.
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