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Hey Spotify: Beats Music Has More Than 525,000 Paying Subscribers…

beatssuperbowl

It’s working, at least if you believe these numbers coming from Beats.  

Beats Music launched on January 21st of this year.  Just two months later, Beats already has 525,000 paying subscribers, according to details now being leaked by the company.

In fact, Beats was signing up 1,000 new paying subscribers every day in its first month, according to company data.  “The company enrolled about 28,000 customers to the $9.99-a-month music service before free trials with AT&T,” Bloomberg just reported, citing insider sources who “requested anonymity because the information is private”.

But that was before a gigantic funnel began taking hold.  According the the same sources, Beats started driving 750,000 free trials starting January 31st, with 30-day (and 90-day) windows being used.

Of that number, an astounding 70 percent are converting to paid subscriptions, at least according to Beats sources.

It’s unclear how many of those people are paying directly, and how many are subscribing through AT&T Family Plans (at $14.99 for up to 5 users).  Either way, Bloomberg cited a study showing that Beats will become profitable after reaching 5 million paying subscribers.  Moving forward, Beats is planning an aggressive campaign involving bundling through mega-partners like Target, AT&T, and others.

The news comes as Spotify appears to be slowing down, possibly in dramatic fashion.  In early 2013, Spotify proudly announced its 6th millionth paying subscriber.  Spotify has yet to announce another milestone.

 

Written while listening to Frozen (Original Motion Picture Soundtrack) on Rdio.

 

 

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Comments (35)
  1. Anonymous

    This story and headline is totally ridiculous. Congrats Paul for falling for the most misleading BS I’ve seen in a decade, even by music industry standards. Simply put, you are a gullible fool.

    Read what the Bloomberg article actually says: “The AT&T tie-in created a pipeline of 750,000 potential subscribers who signed up for 30-day and 90-day free trials starting Jan. 31, the people said. As those trials end, more than 70 percent are converting to paid subscribers, they said. ”

    So…they’re counting a “pipeline” of customers – in other words, 750k divided by 5 (how many people can join a family plan) that gives you 150k people who signed up for a family plan trial…and oh yeah, those are 90 day trials so NONE of those people have come off their trials yet since the trials began on Jan 31st as you said.

    OK, that leaves the people who signed up for a one month trial – About three weeks worth of those are now off the trial and roll over into AT&T’s billing -and those people probably don’t even yet realize they’re paying…I’d bet my first born, that’s where the “70% conversion” is coming from.

    If they’re doing 30k a month as per private info, then they’re doing less than 50k trials a month according to that 70% stat. If that’s the case, that totally sucks and Spotify has nothing to worry about. What hype man.


    Reply
    1. Yup

      Spotify had a fuck ton to worry about, Anon, as they are nowhere near profitability. I dunno what the real story is behind Beats but Spotify’s problems are eternal, dude…


      Reply
    2. Paul Resnikoff

      Harsh, but I’m not that gullible. So this is how this works: Beats calls Bloomberg, and they say, in whatever complicated math, that they have half-a-million subscribers. So you can pick apart the detail of 90-day trials (which haven’t ended yet, of course), pick apart the 30-day trials that started 28 days ago, and try to deconstruct whether 1 subscriber actually equals 1/5 of a subscriber, but in all honesty, you have no idea. The main point here is that Beats is reporting a number, and this is how they are doing it.

      Which is why this quote appears in the Bloomberg article:

      “’My first goal is 500,000 people and we’ll kill ourselves to get there,’ Iovine said in a January interview.”

      See how this game works? Now, it’s up to you to decide if you believe it or not. Which is why THIS appears in THIS article:

      “It’s working, at least if you believe these numbers coming from Beats.”

      Thank you sir.


      Reply
      1. TuneHunter

        Paul is reading it right 5 million @ $3!
        Pandora is also @ $3, Sony’s got it all for $3.99 and most of Spoofy @4 $4.99 (in Poland or elsewhere @ $3) Last, we got ad supported YouTube meet grinder arriving soon with another SUB.

        The only conclusion Mr. Keeling and his team is on track to kill the industry.


        Reply
  2. Jimmy Iovine

    You are an idiot. I want to be a tech writer for digitalmusicnews.com instead of living around the corner from the playboy mansion so I can just make shit up all day.


    Reply
  3. Anonymous

    Here’s the only thing I want to know:

    Is Beats like Spotify, or does it pay artists?


    Reply
    1. Paul Resnikoff

      Beats has portrayed itself as a far more artist-friendly version of Spotify, though we don’t know the numbers. Part of the reason is that Beats hasn’t been in the marketplace for too long, so we haven’t been able to see leaked royalty reports (of which there are volumes for Spotify).

      At this point, there’s also the unknown question of what Beats is paying majors for the use of their content. Jimmy Iovine, as you may know, is ‘one of them,’ in a serious way, so there may be better terms afforded as a result. One problem that Spotify has is that immense payouts to majors invariably shrinks the pot available for artists payouts, and majors are notorious for not properly accounting to artists.

      What that all ends up placing on the right side of the ‘=’ sign for artists is hard to decipher at this point. But of course, we’ll be watching.


      Reply
      1. Anonymous

        “we don’t know the numbers”

        …and that says it all.

        We don’t have to rely on rumors, hearsay and leaked reports to know what iTunes pay. They just don’t have anything to hide.


        Reply
        1. curious

          Has Apple ever published their contracts? I don’t think so (but I’m not sure – someone please confirm).

          Apple does publicly state that they pay 70% in the App Store but I don’t think they do the same for iTunes. Some artists and distributors have stated the 70% figure but do we know for sure that they pay the major labels that rate? And not 75% or more?

          I just don’t think Apple is any more transparent around music than other music services.


          Reply
          1. Me

            The iTunes model is also a lot simpler and more traditional.


            Reply
          2. Anonymous

            “Some artists and distributors have stated the 70% figure”

            Yes. Know why? Because it’s true.


            Reply
        2. Jimmy Iovine

          Haha, yeah because iTunes keeps 30% of every sale for apples meager coffers.


          Reply
          1. Anonymous

            Oh yes. Apple is the personification of evil. It’s just that the devil has a good marketing department.


            Reply
          2. Anonymous

            “Haha, yeah because iTunes keeps 30% of every sale for apples meager coffers.”

            70% to artists is extremely good, compared to the other three main music providers:

            YouTube pays 50%. Pirate Bay pays 0%. Google Search pay 0%.


            Reply
  4. Dr.X

    Why is there no coverage on 2013 RIAA numbers?

    Source:
    http://

    76.74.24.142/2463566A-FF96-E0CA-2766-72779A364D01.pdf

    2012:

    Streaming Revenue: $1.0328 billion USD (up 59%)
    Singles Download Revenue: $1.623.6 billion USD (up 6.7%)
    Album Download Revenue: $1.205 billion USD
    CD (physical): $2.4856 billion USD

    2013:

    Streaming Revenue: $1.439 billion USD (up 39.3%)
    Singles Download Revenue: $1.569 billion USD (down 3.4%)
    Album Download Revenue: $1.234 billion USD (up 2.4%)
    CD (physical): $2.1235 (down 14.6%)

    Streaming Revenue (2011): ~$650 million USD
    Streaming Revenue (2012): $1.0328 billion USD (up 59%)
    Streaming Revenue (2013): $1.439 billion USD (up 39.3%)


    Reply
  5. Dr.X

    If Streaming grow 27.5% in 2014 and CD sales declines by 15%, Streaming will be the biggest of the 4 main components.

    Streaming Revenue (2011): ~$650 million USD
    Streaming Revenue (2012): $1.0328 billion USD (up 59%)
    Streaming Revenue (2013): $1.439 billion USD (up 39.3%)
    Streaming Revenue (2014) PROJECTION: 27.5% growth = $1.835 billion USD

    This will be bigger than CD revenue, single download revenue, album download revenue.


    Reply
    1. TuneHunter

      Dear Dr.X,
      Streaming without alternate income from discovery is the biggest shrinker of the industry.
      There is no other possibility – they will kill not only CD (dead right know) but iTunes, Amazon and many untested and brilliant monetization possibilities.

      500 million at $4 is just 24 billion and global 500 will NEVER arrive.

      Music is like a premium cream, if we whip it right we will have 100 billion dollar industry.

      Steaming is just wrong whipping tool converting premium to manure!


      Reply
      1. TuneHunter

        Another note to Dr. X
        1999 CD sales are worth today with just inflation adjustment (no growth factored) 56 billion.

        Streaming is an act of desperation, lack of creativity or some kind of intoxication on label side.
        Music is perfect for internet monetization and you do not have to be 10 million dollar executive at Universal to see 100 billion dollars of merchandise!


        Reply
  6. Adam

    Weird. If they had 500k sub why wasn’t that the Bloomberg headline, rather then 1000 a day?

    Seem like Iovine is using the creative accounting skills he learnt as a label-man again.


    Reply
  7. Anon

    70% conversion? cough cough. bullsh*t.


    Reply
    1. Willis

      We have a winner!


      Reply
  8. Dead Beats

    As an aside, what happened to Dre and Trent? Did they stop drinking Iovine’s cool aid?


    Reply
  9. Jimmy Iovine

    Dre and Trent are right here bro, what’s your question?


    Reply
  10. Harold Spenson

    Beats schmeats… Yawn. Let’s see if they’ll be around in a year’s time.


    Reply
  11. Jakomi Mathews

    Well I do not know about there streaming service as it has not launched in Australia yet. But I do know that Beats headphones are shite. Have spoken to two of Australia’s largest electronics retails and they have stated that Beats headphones are returned with faults and or broken at a ratio of 4:1 when compared to every other headphone brand they stock and sell. As such I would suggest quality control is a serious issue and it should not be at the highway robbery prices Beats charges for its range of headphones. So Beats is great at marketing, just like apple, but they clearly have the same quality control issues despite demanding premium prices. On a final note I really do hope Beats music has a serious attempt at knocking Spotify from its arrogant mantle…


    Reply
  12. FarePlay

    As we’ve seen much of the streaming payouts go to multiple plays of the same track. Wouldn’t it make sense for these streaming services to support paid downloads and cut down on their per subscriber copyright payouts? Wouldn’t that benefit both the streaming services and the artist?

    Pandora used to do this. Or is it a case of desperation where the streaming services are trying everything they can to support their flawed business models?

    Pay us and you’ll never have to buy music again anywhere else, instead of positioning their business as the ultimate destination for music discovery. A model where everyone wins. With the power of direct advertising to the most popular music player, the fing smart phone, one would think that with the marketing support of AT&T Beats would have far greater penetration.

    Finally, as a free service, the Spotify App can languished unused forever on a desk top or mobil phone and still be counted as “an active user”. It still resides on my digital devices, although I’ve only used it a handful of times to check it out when first launched. I bet that millions of Spotify Subscribers do not use it, AT ALL..


    Reply
  13. Startup

    I wish Beats Music the best of luck but I have to say this can’t possibly be true. a 70% conversion rate is near if not completely impossible. If they were converting at 70% they would have gotten far more than 60 Million in funding.


    Reply
  14. Anonymous

    70% conversion of AT&T subs with integrated billing is high, but believable for the first cohort of customers to convert from free trial to paid subscribers. Inevitably, there will be a number of these trial converters who will recognize the charge on their bill during the first month and cancel. Six months of early life churn data will tell a much more accurate story.

    Outside of the AT&T relationship, Beats insiders have shared a much less rosy picture of their no credit card 7-day (extended to 14-day) trial conversions with others who work in the streaming space. What is being shared is low, low, low single digit conversion.

    This “leak” to Bloomberg, in my opinion, is a planned, strategic move by Jimmy and Ian to keep the positive news going. But based on the extended trial periods they are offering to AT&T customers, it is a bit premature to gauge their success. Let’s revisit at the end of summer.

    On another note, this was posted to Rhapsody’s news blog yesterday: http://news.rhapsody.com/2014/03/21/rhapsody-and-napster-to-wind-down-partnership-with-the-echo-nest/. While the main topic of the post is regarding Rhapsody’s decision to terminate their relationship with The Echo Nest, the last paragraph includes an interesting nugget of information. “Rhapsody and Napster has driven 40 percent paying subscriber growth in the past two quarters and continues to add thousands of global paying subscribers each day.” Some back of the napkin math suggests that 40% growth would mean Rhapsody/Napster is adding ~3,000 NET subscribers each day and their paying subscriber base is now north of 1.5 million. Curious whether they will add more detail in future announcements

    With additional rumors of Apple and Amazon introducing on-demand music services, it seems there will be no shortage of subscriber number speculation to report and discuss any time soon.


    Reply
  15. Anonymous

    70% conversion of AT&T subs with integrated billing is high, but believable for the first cohort of customers to convert from free trial to paid subscribers. Inevitably, there will be a number of these trial converters who will recognize the charge on their bill during the first month and cancel. Six months of early life churn data will tell a much more accurate story.

    Outside of the AT&T relationship, Beats insiders have shared a much less rosy picture of their no credit card 7-day (extended to 14-day) trial conversions with others who work in the streaming space. What is being shared is low, low, low single digit conversion.

    This “leak” to Bloomberg, in my opinion, is a planned, strategic move by Jimmy and Ian to keep the positive news going. But based on the extended trial periods they are offering to AT&T customers, it is a bit premature to gauge their success. Let’s revisit at the end of summer.

    On another note, this was posted to Rhapsody’s news blog yesterday: http://news.rhapsody.com/2014/03/21/rhapsody-and-napster-to-wind-down-partnership-with-the-echo-nest/. While the main topic of the post is regarding Rhapsody’s decision to terminate their relationship with The Echo Nest, the last paragraph includes an interesting nugget of information. “Rhapsody and Napster has driven 40 percent paying subscriber growth in the past two quarters and continues to add thousands of global paying subscribers each day.” Some back of the napkin math suggests that 40% growth would mean Rhapsody/Napster is adding ~3,000 NET subscribers each day and their paying subscriber base is now north of 1.5 million. Curious whether they will add more detail in future announcements

    With additional rumors of Apple and Amazon introducing on-demand music services, it seems there will be no shortage of subscriber number speculation to report and discuss any time soon.


    Reply
  16. Fenyman

    I think you have one too many zero’s on the reported number.

    However, you can print anything they tell you but that doesn’t make it true.


    Reply
  17. Jimmy

    The Beats offices are already ordering toilet paper made out of gold.


    Reply
  18. Michael K

    Let’s get to the real point. As a forever long user of Pandora and MOG, Beats truly sucks. Users are dying for a radio type slider used with MOG (and it never really worked liked Pandora, but better than nothing), and all Beats can say is “Gee, Great Idea!!. We’re working On it!!” BS, a monkey could have figured it out by now. Oh, and by the way Beats, a HUGE, and I mean HUGE amount of people stream to their workplace and don’t use their device in the office. Guess what? Your web players not only sucks, it stopped working weeks ago!

    Oh, and Beats response? We’re working on it.


    Reply
  19. Dennis

    I didn’t pay 6k + for a music system to listen to poor quality music source. Nice job beats. Championing mediocrity.
    Think qobuz


    Reply
  20. dre-rei-rei

    sukz. just sukz. sort of like when bush stole the elections. happened. dozent make it rizight.


    Reply
  21. olc

    After using Mog and being very happy with it, Beats buys and kills it. Do you think Beats would try to learn something from MOG about a functional product? Of course not. We know that at Beats marketing hype trumps functionality. Beats Music gave me a free 2 month trial for having MOG. I got that, the free month from Spotify and 3 months free from Google Play All Access. Here’s a few issues with Beats – no queue
    management, no control of playlists from your web UI, a search
    engine that fails to find things unless you put in the exactly correct keyboards, and
    worse sound quality over Sonos and mobile devices, than the others.

    Moreover the latest word from Beats support is “the play queue as of now will not be incorporated in Beats Music. Beats Music is more geared toward playlists and recommendations.”
    In other words, we’ll choose what you play because you aren’t smart enough to know what you want. What did you expect? They market crap headphones at exorbitant prices as fashion accessories not audio gear. Apple in the mix will only compound this attitude, where marketing hype trumps function.

    Spotify is not a lot better. Their user experience could use a lot of works. Their UI is clunky It is looking like Google will come out as the best of them, although I’d love for a chance to compare to other 320kps+ services like Qobuz and Deezer, and even a 320kps RDIO. The biggest problem with Beats isn’t that it has so many problems but that they have no intention of improving it.


    Reply

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