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Beats Music Off to a Sucky Start…

FTL

Beats Music says they already have half-a-million paying subscribers.  But maybe that’s bulls*&T.  From the pages of Billboard

“Two of music’s most successful brand marketers, Jimmy Iovine and Dr. Dre, are in the hot seat as label sources grouse that the first 100 days of the duo’s subscription streaming service, Beats Music, has been a disappointment and soon will face competition on the mobile platform when Sprint begins bundling Spotify with its ‘Framily’ plans.”

 

“Jimmy is finding out this is tougher than it looks,” says one senior executive. “This business takes time.”

 

“Some label executives also contend that Iovine and Dre’s success at building Beats Electronics into a world-class brand in just five years created unrealistic expectations for their streaming service.  ‘We are rooting for them,” says one.”

But is it really that bad?  Billboard’s sources estimate that Beats currently has paying subscribers in the ‘low six figures,’ while Spotify is protecting a fragile US-based lead of 2 million.

 

Image by Duncan Hull, licensed under Creative Commons Attribution 2.0 Generic (CC by 2.0).

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Comments (33)
  1. Candid

    Not a surprise, Ian Rogers is at the helm, he is great at running companies into the ground.


    Reply
    1. joanned

      ouch


      Reply
  2. tippysdemise

    What seems telling is that a massive band like Radiohead as less than 4,500 followers on Beats. On US Spotify they have over 730,000. That should tell us something about the difference in subscriber scale between the two streaming services.


    Reply
    1. jw

      That’s not a fair metric. Subscriptions take place over time, if you have 500,000 subscribers over 3 years, your subscriber numbers are going to be totally different than having 500,000 subscribers over 3 months.

      Also, Beats isn’t being marketed to Radiohead fans. If you look at a mainstream artist like Drake, his ratio looks more like 1:16, rather than the Radiohead ratio of 1:160. That tells an entirely different story.


      Reply
      1. jw

        By subscribers I meant followers. My bad.


        Reply
        1. hoodgrown

          Great response. That was the exact point I was going to make JW.


          Reply
  3. jw

    What makes the Spotify lead fragile? At this point, a lot of those subscriptions are years old, & you don’t just switch at that point. Beats’ subscribers are likely to drop off within the first few months of their paid subscription, plus having such a large portion of their subscribers tied up to AT&T, what happens if any of those customers leave for Verizon? A lot of cell phone users switch every two years based on who has what exclusive phone… the exclusive handsets war works against Beats in that respect.

    If anything is fragile, it’s Beats’ subscription base… that’s just the nature of being the new kid in town, & also being tied to mobile carriers from the get-go.


    Reply
  4. D

    Using a picture of the Challenger Disaster where people lost their lives is just horrible.


    Reply
    1. Willis

      Yeah, bad call, Paul. Very bad taste.


      Reply
      1. Paul Resnikoff

        You guys are right. Actually I didn’t even connect that with the Challenger, I was sifting through photos of failed rocket launches and explosions.

        So I changed it. Thanks for the alert.


        Reply
        1. Anonymous

          “So I changed it”

          …which opens another, and worse, can of worms:

          This image is obviously not licensed under Creative Commons by its owner, and I’ll bet that the actors haven’t given their permission either.

          The good news for you is that you probably can’t be sued — at least not successfully — since you can claim you were in good faith.

          The bad news is that this kind of abuse makes Creative Commons useless for all practical purposes…


          Reply
          1. Steve

            Neither being at the Challenger disaster and opening a lens at the right time, nor doing a movie poster is exactly “Creative”. Not what the copyright statute was intended to cover it all.


            Reply
            1. Anonymous

              Copyright is intended to protect Intellectual Property, such as photographs and posters.


              Reply
    2. Andre

      Agreed. Very poor taste.


      Reply
  5. dwingate

    I heard they are counting family plans as multiple subscribers but cannot confirm.


    Reply
  6. Casey

    The “low six figures” estimate is even worse when you figure in that fact that they purchased users from MOG. All that money spent on marketing and partnerships.


    Reply
    1. Paul Resnikoff

      Whispers suggested that MOG had very low subscriber uptake. Nowhere near a 6-figure. But I don’t have concrete stats there.


      Reply
      1. Foul Hymen

        MOG had around 100K subs worldwide.


        Reply
  7. Ron

    I just checked and Beats Music is the no.1 Music App on the iTunes store today. I think it’s too early to see how this will play out.


    Reply
    1. Paul Resnikoff

      Something’s a tad strange with that ranking. I can’t put my finger on it, just sayin’


      Reply
      1. G

        iTunes featured Beats Music in their app store, which is why their ranking went up. Strange that a competitor like iTunes would feature Beats.


        Reply
        1. Foul Hymen

          Did you forget that iTunes will make more profit from Beats than Beats itself, by taking their 30% cut of revenue with virtually no costs?


          Reply
  8. Anonymous

    All streaming activities with YouTube amount to a mega effort to pack-up $100 billion dollars of music and 43 billion dollars of global radio into $35 billions dollar scrap yard!

    By 2025 Daniel Ek’s proven business model and YT will shrink $143B of goods to 35 billion GETHO.

    I’m surprised to see Apple, Amazon and Google in this stampede to dead end tunnel.


    Reply
  9. Steve

    I am going to buy me a music subscription because it is endorsed by Dr. Dre and Jimmy Iovine .. yup yup yup.


    Reply
  10. Bad Beats

    I tried but the service is lacking. Especially, the “Sentence” game. Its interesting the first time but annoying everytime after that. Also, using the same UI for iPhone & iPad seems cheap and lazy for a company that had $80MM in its development war chest. Not enough for me to switch from FREE Spotify.

    Finally, I think its telling that both Dre and Trent are nowhere to be found.


    Reply
    1. Foul Hymen

      Isn’t that Trent’s voice in that cheesy commercial?


      Reply
  11. Willis

    Beats sucks, and will be yet another way for investors to flush good money down the toilet. Anyone remember DEN? The responsibility lies with the business and the investor. Putting money into hype, then failing, is a sure was to scare off investment in the space for projects that actually have a shot and benefit people. It’s a shame that this isn’t one of those.


    Reply
    1. Foul Hymen

      All the major investors are billionaires who can afford to drop $10+ million each for the chance to inflate their egos and increase their “power” a little more.


      Reply
  12. J. Jacobs

    You show a photo of the Challenger disaster along with the “…off to a sucky start” and “failure to launch”. You people should be ashamed of yourselves for this disgraceful lack of compassion. Your callous disregard for the true American heroes who perished in this tragedy is almost inconceivable. The failure is yours for your utter lack of humanity.


    Reply
  13. Bill Rosenblatt

    I happen to love Beats Music, yet for the same reasons I love it I think it’s destined to fail.

    It strikes me as one or both of two things:


    Reply
  14. Bill Rosenblatt

    I happen to love Beats Music, but the reasons why I love it strike me as also the reasons why it’s destined to fail.

    Beats Music is one or both of these things:
    1. Iovine building something to please himself rather than the masses. It’s a service by music geeks for music geeks. I’m a music geek, therefore I like it. Passive Pandora listeners won’t be interested, and iTunes music buyers won’t get it.
    2. They are responding to the general problem with subscription streaming services — that they aren’t a music experience that the general public is accustomed to (i.e., they aren’t like record stores or radio) — by bringing back familiar elements such as these old antique relics that you might have heard of, called “albums.” I’m over 50 years old and used to have thousands of those things lying around the house, therefore I like it.

    It’s possible that services like these will pull in the kinds of 100 million numbers that iTunes and Pandora pull in, someday, but it’s going to take quite a while.


    Reply
    1. Foul Hymen

      I think it will fail because it focuses too much on albums, and kids don’t care about “records” the same way Jimmy and his Hollywood posse do.


      Reply
  15. Helen

    APPLE + BEATS: Apple should cut all ties and run! Help stop it and sign.
    http://www.ipetitions.com/petition/stop-apple-beats-acquisition

    The market has clearly communicated that it doesn’t like the idea of a Beats deal with Apple. However, most naysayers and the media have struggled to properly articulate the reasoning for the bearish sentiment.

    This is how it should be communicated:

    – Beats should be viewed as a fashion company, as they offer very little value-add from a technology perspective. Beats main market are teenagers who currently view the earphones as a “cool” fashion statement. This is the root of the concern, as we all know that fashion statements quickly become “uncool” due to overexposure, boredom, or something more “cool” coming onto the market. It would be fair to say that the best days of the Beats “coolness” are behind it, and the sunset looms as they may soon become “un-cool”. Paying $3.2 billion for a company that will probably fade away into “un-coolness” soon is probably not a wise acquisition. One cannot buy long term “coolness”, as it must be created or earned.
    – Apple could relatively easily create a superior headphone product at a fraction of the cost of the Beats acquisition, and Apple products are still very much “cool” and in fashion
    – Apple could improve its streaming service for a fraction of the cost of this deal, and Apple subscriptions and profitability would remain leaps and bounds ahead of the Beats service.

    On balance, very poor judgement at the top of Apple if this deal actually goes through.

    http://www.forbes.com/sites/gordonkelly/2014/05/09/why-apple-has-lost-the-plot-with-3-2-billion-purchase-of-beats-by-dre/?utm_source=feedblitz&utm_medium=FeedBlitzEmail&utm_content=395530&utm_campaign=0

    http://blogs.wsj.com/corporate-intelligence/2014/05/09/apple-spend-3-billion-on-beats-lose-5-billion-in-market-cap/?mod=yahoo_hs

    http://seekingalpha.com/article/2206943-apple-would-find-it-difficult-to-integrate-beats-electronics

    http://www.businessinsider.com/apple-beats-rationale-2014-5

    http://www.hypebot.com/hypebot/2014/05/apple-in-talks-to-buy-beats-electronics-32-billion-said-to-be-mostly-for-headphone-business.html

    http://www.digitalmusicnews.com/permalink/2014/05/09/7reasonswhyapplebuyingbeatsisbadidea


    Reply

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