When Apple acquired Dr. Dre’s Beats, their main reasoning wasn’t necessarily the fashionable and overpriced headphones produced by the company. Apparently, Cupertino’s eyes remain fixed on Spotify, Pandora, and the other companies making streaming radio a major force in the music industry. So Apple Store Beats doesn’t seem to be the relevant story anymore, with attention now focused on the predicted merger of iTunes Radio and Beats’ own streaming radio service in the next version of iOS.
Will a Beats-branded version of iTunes Radio really make a dent in the streaming radio market share of giants like Spotify? Does Dr. Dre still “wake up in the morning and compose a beat?” Let’s take a closer look to find the answer to one of those pressing questions.
Beats Streaming Radio Becomes the $3 Billion Question for Apple
Apple paid $3 billion for Beats, one of the largest acquisitions in the company’s history. Leveraging the Beats brand — and indirectly the taste of Dr. Dre — becomes paramount for those bean-counters in Cupertino. Considering how streaming radio is killing iTunes and other music services’ song download revenue — not to mention the revenue of nearly all musicians — Apple wants a piece of that growing pie, especially since iTunes Radio never garnered many paid listeners among the 200 million iTunes users. Even giving away free music engendered bad publicity for the company in the wake of the recent U2 forced iTunes download debacle.
If Apple is able to convince only a fraction of iTunes users to pay up for a subscription service, they stand a chance against the giants of the nascent industry, considering that Spotify has around 12.5 million paid subscribers, and only 4.5 million of Pandora’s 70 million users maintain a paid account. While Credit Suisse does predict an increase in worldwide streaming radio subscriptions from fewer than 20 million to 150 million by 2025, those aren’t massive numbers, and 2025 seems far into the future, considering how fast technologies change.
Pandora’s has been able to build a successful business with only small percentage of their users actually paying for monthly subscriptions; their ad-supported free service continues to work well for the vast majority. Doesn’t that sound strangely familiar to how the business model for plain old terrestrial radio has worked for the past century? It remains to be seen whether or not a Dr. Dre curated streaming radio service (or curated by anyone else for that matter) warrants enough of an interest from iTunes users to make Apple’s $3 billion investment of Beats pay off in the future.
Tim Cook might have to sell a lot of a overpriced headphones!
Free Internet Radio Sources Still Abound
Even with names like Pandora and Spotify dominating the world of Internet radio, and Apple poised to make their own gambit in this sector, you as a consumer enjoy a cornucopia of options for easy — and free — streaming Internet radio at your home. These days it seems nearly every home A/V device — receivers, Blu-Ray players, videogame consoles, dedicated Internet radios, and more — sports Wi-Fi functionality, allowing you to easily stream music and other radio content from the big services like Pandora, as well as a full array of Internet and terrestrial radio stations that broadcast online.
Additionally, if you’ve already made a large investment in CDs and music downloads, ripping those CDs and storing the digital audio files on a network hard drive compatible with DLNA allows you to stream the music you already own to a variety of Wi-Fi-enabled devices from your Smart TV to your smartphone. Your own music is easily accessible on your home network, plus you can listen to your music collection while traveling when accessing your home network securely.
In short, actually paying for a streaming radio subscription — from Pandora, Spotify, or even those Apple Store Beats — makes little sense when so many free or ad-supported Internet radio services remain available. Those of you with your own music collection can still easily access that content over the Internet or your home network. Wake up in the morning and play your own beat!
Photo Credit: Twang Photography