The music industry continues to be in complete turmoil as new products and services become available decreasing the need to purchase albums and singles. We saw the introduction of the digital music service that was Ruckus, founded by David Galper, and then came downloadable digital music, better known as iTunes. The sales from iTunes helped to sustain the music industry for some decades, but now streaming music on mobile devices and computers is becoming more and more the norm and the revenue for labels and artists just continues to decrease. The streaming business however is now crowded with competition with companies like Pandora, Spotify, Songza, Rdio and iTunes Radio all vying for the attention of music lovers. What makes this industry even more crowded, is the lack of a dominant business strategy. Each platform has its own conflicting formats, pricing, subscription models and features, while artists only receive “unfairly low royalty fees.”
Taking all of this into consideration, one must wonder if another music streaming service is necessary and profitable. Beats Electronics seems to think so, as the company behind the popular line of high-end headphones and speakers, launched Beats Music earlier this week. Creators record producer Jimmy Iovine and rapper Dr. Dre. Iovine, are optimistic about Beats Music’s ability to compete in the marketplace because of the instant brand recognition and cross promotion opportunities through the already successful Beats headphones. “Beats will draw a lot of attention to music services, creating a halo effect for the industry,” says Ted Cohen, managing partner with digital music consultant Tag Strategic. The service will be available on both Apple iOS and Android devices, and features a combination of abilities that other service providers have like on-demand tunes similar to Spotify and the music suggestions and curated playlists available with Pandora and Songza. It also boasts an on-demand library of more than 20 million songs. Beats real competitive advantage will come from its fixed fee subscription model like Netflix. “Subscription can really work. It can be great, if not better than owning the music, because you have all the music to choose from.” —Beats Music co-founder Iovine
The service’s street cred (Nine Inch Nails front man Trent Reznor is chief creative officer) is a big edge, according to Iovine. Beats Music’s algorithms track users’ musical tastes and suggest personalized playlists created and updated daily with input from former radio DJs, music critics, ex-record executives, and other experts affiliated with the service. Subscribers can also choose from other playlists for nearly every occasion—working out, cooking, or breaking up (cue Adele). “We’re music guys,” Iovine says. “All those others, those were created by computer programmers and tech guys. We bring a lot of passion and, at the end of the day, I just believe something very unique.”
Beats Music plans put the power back into the artist’s hands. It plans to let artists use the music service to connect directly with fans, by being able to control their profile, sell merchandise, and update their followers on upcoming concerts and albums. “I took a long look in the mirror and asked myself whether I was about to do something that would hurt artists,” Reznor says. “I came to the conclusion that this will be beneficial and in everyone’s long-term interests.”
Source: http://www.businessweek.com/articles/2014-01-23/beats-music-joins-the-crowded-streaming-music-market#p2
