Beats Music, an innovative streaming service combining top tier music experts with the highest quality technology to deliver the “right music at the right time”, was purchased by Apple for $3 billion. However, rumors of the service shutting down have been raging, even though Apple denies it will happen.
With Beats Music, listeners can pay just $10 a month and gain unlimited access to more than 20 million songs from every possible genre, completely ad-free. In addition to Apply buying Beats Music this past May, the company also purchased Beats headphones as part of the deal.
Last Monday, Techcrunch broke the news that Apple was selling Beats Music, this according to five anonymous and trusted sources. However, Techcrunch quickly backed down, saying that rather than selling the popular music streaming service, Apple was probably going to modify it over time, which may or may not include changing the brand.
When approached about the implication, an Apple spokesperson denied that Techcrunch report published in Rolling Stone magazine. It is true that after announcing Beats Music would be purchased, Apply did not specify any detailed plans but sources connected to the music business think that somehow it will be combined with iTunes Radio, which competes within a $1 billion music market to include Spotify and Pandora.
At this point, there have been no changes to Beats Music although the chief executive, Ian Rogers, changed positions to now overseeing iTunes Radio. It is also speculated that Jimmy Iovine, one of Beats Music’s top executives, helped guide the band U2, whom he worked as the head of their record label Interscope, into a free album deal with iTunes.
According to insiders, a key part of Apple buying Beats Music was the subscription service, which at the time of purchase was at 111,000 and is current up to 250,000. Interestingly, the late Steve Jobs disliked the streaming business but Tim Cook, the new chief executive, admitted after messing around with Beats Music, he could not sleep. As a result, he is 100% onboard with music subscription.
Currently, iTunes remains the top music retailer specific to downloads but in 2013, track sales dropped by 6% and for 2014, they have dropped an additional 13%. Even album sales have experienced a 15% decline. Experts in the record business have stated time and time again that the business is in transition, from selling music to selling music subscriptions.
Whether Beats Music will actually shutdown is hard to say but Apple does have a history of shutting down brands purchased. Lala is a great example, which was purchased in 2009 and then integrated into iTunes.