“More and more reports are coming out that Apple’s (AAPL) real interest behind the rumored Beats acquisition is to obtain its subscription streaming service more so than just the accessory business,” D. Mero writes for Seeking Alpha. “When compared to market leaders Pandora (P) and Spotify, Beats has miniscule paying subscribers. Why the interest in BeatsMusic? As Beats co-founder Jimmy Iovine put it… no one offers an interactive music service through curated lists. The next song is just as important as the one currently playing. According to Iovine, this is the feature that will define future of subscription streaming services.”
“The music market is moving away from the pay-per-song download model that iTunes uses and towards a streaming model,” Mero writes. “Beats Music boasts a catalog of 20M songs at a monthly rate of $9.99, making it competitive with established leader Spotify. Beats, however, is distinguishing itself from competition by offering a different music experience for each taste out there through a combination of human curation and computer algorithms.”
“The company has compiled thousands of customized playlists with the help of a small army of freelancers curating. Playlists can be based on the work of an artist, a genre, a year or even an activity, like BBQing or working out. The goal is to provide an interactive music service through curated list that’s customized to listener,” Mero writes. “The algorithms developed by Beats for music curation would make for a bonus feature on iTunes. With 800 million iTunes users, Apple and Beats will have ample data to curate music tailored towards each music taste. Additionally, with a little marketing, Beats Music could be advertised to 800 million users worldwide. That miniscule 200k subscription figure is expected to grow at a rapid pace once Apple steps into the picture. When taking into consideration that Beats has converted around 70% of their free users to paid accounts, the potential synergies of an Apple/Beats affiliation overshadow the $3.2billion acquisition cost.”
Read more in the full article here.
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