Beats Music Strategy Includes “Squashing Spotify”…

Get ready, Beats is bringing the big guns.

Sources told the New York Post that AT&T will be adding a Beats Music bundle to their mobile phone services.

The New York Post also reports that Beats Music has a huge marketing campaign planned that is focused on “squashing Spotify“.  As part of this campaign Beats will have multiple Super Bowl ads featuring new artists (keep in mind that Super Bowl ads cost millions of dollars).

Of course, Beats will have more to worry about than Spotify. Pandora’s shares are at an all time high and Deezer will soon be hitting the U.S, just to name a few streaming competitors.

41 Responses

  1. Yves Villeneuve

    How much did they have to sellout to AT&T to get this bundle deal?

    Unless I’m guaranteed .012 per stream, free or paid, I won’t be supplying my music to them.

  2. john

    good luck thinking that withholding from streaming will do you any favors.

    • Yves Villeneuve

      For the record, I’m withholding from poor payouts not streaming. My music is on Rhapsody because of fair payouts.

      • Me

        What are you going to do if/when Rhapsody goes under because it doesn’t have the subscription levels that other services have? Also, why limit who can access your music? You get more money by making it available to more people than you do by making it available to a small amount of people. The only person you’re hurting in your protest is yourself.

        • Yves Villeneuve

          I’m not limiting anyone. My music is available for purchase by anyone and can be synced to any music player that allows syncing with MP3s, including Spotify’s music player.

          I am building fan loyalty to the artist and his music as opposed to the retailer. If you’re more loyal to the retailer then suit yourself. Respectfully, I won’t sweat it if you are. To each their own.

          • Me

            There are 6 million Spotify users who don’t have access to your music. So yes, you are limiting your fans.

          • Yves Villeneuve

            Everyone has access to my music, including you. See for details.

            You make it sound like subscribers are handcuffed to or have exclusive contracts with retailers? Not true. If you choose not to access my music, that is entirely your choice, as it is entirely my choice what business deals I engage in. You don’t seem to care that I get paid fairly. I’ll wait as long as it takes until the terms are appropriate.

            By the way, there are 123mm music buyers in the USA. Spotify maybe has 2mm but they last reported 1mm in the USA.

          • Me

            My point is that people only subscribe to one music service (if they do indeed subscribe). People who subscribe to Spotify, Rdio, Deezer, and those who will soon subscribe to Beats are not subscribing to Rhapsody. By not having your music on these sites, you are indeed limiting who has access to your music. These people are not all searching for your website, and they aren’t all commenters on DMN.

          • Yves Villeneuve

            My point is, if you want my music and is not on your favourite streaming service, you can purchase it like everyone else. If you steal my music then you’re not a true fan…sorry but “pirate” is simply a wishful hip way of saying “thief”; I don’t support or promote anti-social (bad) behavior.

            Trust me when I say I’m not waiting around for people to accidentally discover me. I do a heck of lot more promotion outside of this news/blog site. Piracy of my music does not cover the cost of my marketing or my livelihood.

          • Me

            Lol… I never said anything about piracy. I don’t know why you felt the need to bring it up. Anyways, good luck with your strategy.

          • 8,000 FB fans, wow! (not.)

            “Not waiting for someone to discover” you…on a service with millions of users ACTIVELY SEEKING new music? Sounds like a smart game plan.

  3. steveh

    “squashing Spotify” = music to my ears!

    Grind the smirking bastard Ek into the ground!


  4. john

    congrats, one of my projects makes 1000 dollars a month on spotify and around 15 bucks a month on rhapsody. i don’t have 12,000 bucks to set on fire every year.

    • Yves Villeneuve

      My point is you should be getting $2000 per month from Spotify if you received the Rhapsody stream rate.

      • Music Industry refugee

        That’s a nice thought, but spotify is not making money at the current rates. How long do you think it will be in business if it doubles its rates? You are perfectly justified in choosing to license your music to the licensee that pays more, but it seems like you are putting principle before cash.

        • Yves Villeneuve

          Not necessarily. I prefer long-term vs short term strategy. As of end of 2013, on-demand streaming only represents roughly 10% of the entire music recording industry. Downloads represent roughly 40%. CDs have a roughly 36% share. Last I checked, if the decelerating trend continues, on-demand streaming will only grow by 17-18% in 2014.

          The elephant in 2014 is Beats, depending if AT&T automatically bundled Beats Music with existing telecom subscriptions and make everyone pay for it even if they are not actively using it. This would give a delusion of on-demand streaming success.

          • Yves Villeneuve

            Correction. By year end 2013, CDs have roughly 30% market share.

          • Casey

            At&t will never bundle with all plans. That would cost a considerable amount of money. They will probably bundle it with a few select plans at most or simply offer it as a possible add-on, which several other services already have.

          • Casey

            Why is that? People said that when they started more ten years ago. Yet they are still ticking.

            They may not be getting much attention at the moment, but things are actually looking up for them for the first time in several years. They recently overhauled their plans and struck a massive cellphone partnership with Telefonica. Their current smartphone app is without a doubt one of the best in the industry and their upcoming PC software player will probably be a significant improvement. They have been stepping up their game, you just don’t hear about it because they are a paid-only service.

      • Anonymous

        It’s no different then how it was when CDs were all the rage. Companies like Wal-Mart and Costco paid less per CD, and the artist/record label ate the cost if they wanted to be in the large retailer stores. Of course, that’s true for any products sold in these stores. It’s called “economies of scale”. Since selling music has almost zero marginal cost, it’s not a big deal as if you were trying to sell toothpaste.

    • cjhoffmn

      Hey John – I’d love to know more about this.
      Curious if you’d share:
      Is that an album, or just one track, or some other format?
      Was it marketed in any specific way?
      What Genre is it playing in?
      Did it take longer or shorter to get to a point where it sold like that as compared to other music you’ve sold/streamed?

      While I agree with Yves that it would be better if there were higher payouts, I also agree that it can be better to take a marginal dollar. However, I haven’t seen many cases where Spotify was the method through which a track or an album “took off.” I’ve seen more cases where projects were marketed, and Spotify was the distribution channel with scale available.

      I’m very interested to know if the cost of marketing to get a track to “take off” on Spotify is higher or lower as compared to the revenues earned. If you’re making $12K a year from an album (Spotify) and the marketing cost was $5K, then you’re netting more than making $24K/year (Rhapsody) if the marketing cost of say $18K. It can sometimes be the case that less revenue can equal more profits if the costs of the lower revenues fall more than the revenues fall.

      In all the discussion of revenues, I think that point gets overlooked.

      I also wonder about the long-term view point (which is where I somewhat agree with Yves). Spotify might very well fail at some point. If they do, do your profits go back up? If they succeed, do your profits go down? If the answer to either of these is true, then risking the revenues today for potential increased profits later would make sense (which is how I interpret Yves’ reaction). But it is a risk of not taking profits today in exchange for potentially making more profits later.

      I’m very interested to hear about Spotify success stories to really understand it.

  5. Anon

    Look, Ian is the idiot that ran Topspin into the ground. So the first thing he does is spend millions on Super Bowl ads? Tell Jimmy to kiss his money good bye.

      • Yves Villeneuve

        The study shows if Super Bowl ads are advertising new products or the product is very personal then they are successful. Beats has a new product and music is very personal.

    • Paul Resnikoff

      I’d be the first to agree that Super Bowl ads have questionable payouts for this sort of thing (reference Napster II so many years back), but not sure Ian’s the guy making that call. After all, it was Jimmy Iovine blundering through the product plan description with Walt Mossberg of the Wall Street Journal (‘Beats is going to scrape your hard drive’), so who knows which chefs are cooking what.

  6. Yves Villeneuve

    Beats is a well-known brand. That kind of high profile advertising is very effective for respected brands.

  7. Chuck Lovelace

    Renting music.. .no thanks I prefer and will continue to purchase giving the artist a fair payment.

    • Nina Ulloa

      So you’ve never looked up a song on youtube I take it?

      • cjhoffmn

        I continue to find it strange to look up music on YouTube – and generally think it sounds bad. So while I’ve done it occasionally I, like the OP of this reply, prefer to own higher quality versions that I can play at my discretion, independent of connectivity. I will actively seek versions other than youtube to get to better quality sound.

        I do wonder how unusual that behavior is…

  8. Josh

    I just hope they have Sonos app right away and retain the quality of MOG and I’ll give it a spin. I have tried everything… Rdio is a great UI, both on desktop and iPhone, but the stream quality is poor. MOG has excellent stream quality but terrible UI. Spotify has decent to good stream quality and okay UI. I’m currently using Spotify, but there is a lot of crap to the interface. The inbox is junk, finding people is next to impossible, no collection or library for albums and the radio feature is terrible. It repeats more than Pandora… If Beats Music retains 320 kbps and as a user friendly and nice UI, it will be a good option…

  9. GGG

    Great…are they going to pay more? Or is everyone just a Beats fanboy now because they attacked big bad Spotify?

    • Anonymous

      Yes, that’s the only relevant question. Though they do deserve credits for improving the sound (if that part is true, of course — Dre’s headphones could suggest otherwise).