Apple Impressed by Beats' Ability to Attract Paid Subscribers, Likely to Keep Brand Separate

[akuma13]

It's been said countless times but some people choose to gloss over it and focus on negatives. This acquisition primarily had to do with music licences. The beats headphones and name are just icing on the cake.

Apple is playing catch up but this will even things out (or bring them to the forefront) in the music streaming service.

 

[Jambalaya]

It's been said countless times but some people choose to gloss over it and focus on negatives. This acquisition primarily had to do with music licences. The beats headphones and name are just icing on the cake.

Apple is playing catch up but this will even things out (or bring them to the forefront) in the music streaming service.

OK, but I don't understand why you'd pay $3bn for music licenses either.

 

[Antares]

I never thought that I would hear/read the term, "rap musician," used in a sentence without sarcasim involved.

I wonder if Apple will rebrand the music streaming service so that people will know it is an Apple service. Apple Beats. iBeats. Beats by Apple.

 

[cleirac]

OK, but I don't understand why you'd pay $3bn for music licenses either.

But it is not just the music licenses they are buying either for $3Bn. Some of the critics argument is that they are not transferable. But, but, but ... It be might something in the pipeline that Beats has too that Apple needs exclusivity (and also maybe perfect for future iWearables / iTV iEtc).

 

[iChrist]

Whatever you do Apple...

Don't let Eddie Cue near it. He has the kiss of death.

 

[dannys1]

hopefully there will be some audio quality and durability improvements... the designs of the Beats headphones have always been top notch IMO... I've only bought one pair of the Powerbeats which I returned after a week because you can get better sound quality for cheaper and at the end of the day the SQ value is more important to me than the fashion statement.

And the fashion statement is that you look an utter tool for wearing them to 90% of folk. So its a lose lose really.

 

[springsup]

This is either not going to happen or will be a disaster.

iTunes faces a very specific threat: Spotify. The streaming model they've pioneered is clearly superior to iTunes' download model.

How would buying Beats help Apple counter that threat? With some independent brand selling headphones and operating a mediocre streaming service on the side?

That seems like such a confused model. If the threat is Spotify, they should go after them directly.

After all, you need to consider what the point of iTunes even is. Why does Apple even operate a music service? The reason is clear: to provide their hardware customers with a superior music service to anything they can get on other platforms. That's why iTunes only works with iPods, and not other MP3 players even though the music files are DRM-free.

Moving music services in to the cloud levels the playing field quite a lot. How does Apple continue to give Mac and iOS customers a better music experience than those on other platforms?

- If they bought Spotify, making the whole service platform-exclusive would annoy a lot of people. However, Apple might be able to deliver a superior experience with lower prices (bundled with iCloud?), a more permissive free tier for iOS devices, and higher quality audio for their own devices.

- If they bought Beats, things are messy. Headphones can't be device-exclusive since they go through the 3.5mm jack, so they don't help iTunes maintain relevance or help iOS/Mac devices be the best audio machines. The Beats service could be made platform-exclusive more easily than Spotify could, but then you're creating a little Apple-island and cutting off the social side of music that Spotify does so well. Apple would be competing against the cross-platform and more widely available Spotify, and would have a really hard time convincing anybody to switch. In my opinion, they will not win that fight.

 

[Will Lambert]

From the grave of Steve Jobs

Yes. Develop products for another brand and make Apple's audio products look inferior.

 

[cleirac]

If rumor is true, this is making the Apple WWDC 2014 next month more exciting!

But, but, but ... The new iHaters will say, WWDC is always about software!

 

[Warbrain]

Dead on right. The service is entirely composed of paid subscribers outside of the trial users. This is why they're acquiring Beats.

 

[cleirac]

This is either not going to happen or will be a disaster.

iTunes faces a very specific threat: Spotify. The streaming model they've pioneered is clearly superior to iTunes' download model.

How would buying Beats help Apple counter that threat? With some independent brand selling headphones and operating a mediocre streaming service on the side?

That seems like such a confused model. If the threat is Spotify, they should go after them directly.

After all, you need to consider what the point of iTunes even is. Why does Apple even operate a music service? The reason is clear: to provide their hardware customers with a superior music service to anything they can get on other platforms. That's why iTunes only works with iPods, and not other MP3 players even though the music files are DRM-free.

Moving music services in to the cloud levels the playing field quite a lot. How does Apple continue to give Mac and iOS customers a better music experience than those on other platforms?

- If they bought Spotify, making the whole service platform-exclusive would annoy a lot of people. However, Apple might be able to deliver a superior experience with lower prices (bundled with iCloud?), a more permissive free tier for iOS devices, and higher quality audio for their own devices.

- If they bought Beats, things are messy. Headphones can't be device-exclusive since they go through the 3.5mm jack, so they don't help iTunes maintain relevance or help iOS/Mac devices be the best audio machines. The Beats service could be made platform-exclusive more easily than Spotify could, but then you're creating a little Apple-island and cutting off the social side of music that Spotify does so well. Apple would be competing against the cross-platform and more widely available Spotify, and would have a really hard time convincing anybody to switch. In my opinion, they will not win that fight.

Spotify will be too expensive and too greedy / un-innovative. Apple is not going to buy Amazon just to become the instant e-book and retailer king, they did not buy Nokia / Blackberry or will never acquire all those smartphone makers of popular Androids or Canon / Nikon or Swatch or Omega to be the instant "cool" of kings / get the patent ammunitions they need / kill the competition

Apple wants to be the kingmaker aka the king of cools not buying kings to be the new kings. They can make Beats great, and even cooler.

 

[69650]

99% of people are not audiophiles

What percentage of people who still buy music are not audiophiles? Considerably lower than 99% I would suggest.

Beats appeals primarily to under 30's who prefer to stream than buy and don't really care about the sound quality. Dr Dre isn't going to sound any better in hi-def.

 

[TWSS37]

Yap, the radio station model is pretty limited, and serves to upsell itunes songs. You cannot skip more than 6 songs within the hour.

The Beats model is more liberating. The user has more control.

Since when is this an Apple concern?

 

[WilliamLondon]

This is either not going to happen or will be a disaster....

Yes, exactly, you've summarised very well the whole reason that this makes so little sense, so I've concluded that if it is true there's something else entirely we're not seeing such as IP they couldn't buy outright without the rest of the company, perhaps biometrics, perhaps something to do with wireless headphones (to complement or directly support their wearable devices rumoured to be in the pipeline), or something else?

As an adjunct (or upgrade) to iTunes to make it more profitable or to pursue profit from aftermarket accessories from the headphones, it's a lever I personally wouldn't expect Apple to pull as it runs contrary to their business model.

 

[gri]

Not saying I don't agree with some of your points, but no way is Facebook letting go of Spotify. Silly to even think in my opinion.

Thank god I signed up for Spotify before facebook became the login - I resist having a facebook account.

Why does these days everything have to be a login via your facebook account, assuming that everyone just has one of these. No, they don't.

 

[co.ag.2005]

ATT gives away Beats music streaming for free. I was under the impression this is where the majority of their customer are.

free for 3 months. then $10/month ($15/month for 5 lines) after that.

Also,
I do prefer Beats to Spotify, but mainly because it saves me $5/month for my wife and I. It has all the music I could care to listen to so no need to pay more for Spotify.

 

[apersona]

Iovine also a musician

You may not know that Iovine is also a musician. For the last several days he has been playing the PR machine like a fiddle.

 

[SmileyBlast!]

Is it true that Beats headphones cost $14 to make but sell for over $300?

That's criminal profit.

I would never ever ever buy these... unless it came with a free Mac Mini or something...

 

[fmaxwell]

That's the old headphone. The newer one has been reviewed favorably.

I just checked my Stereophile 2014 Recommended Components list. The write-up on the Bowers & Wilkins P3, which received a "B" grade, included: "Compared to the Beats Audio Solo HDs, the B&Ws were cleaner, clearer, more detailed, and altogether more enjoyable."

In describing the D-graded Beats Audio Solo HDs, Stereophile said "The Beats Solo HDs sounded soft, distant and congested...lacked clarity, detail...muted highs...overpriced for the performance." In fact, the $50 Koss PortaPro headphones received a higher rating of C than the $200 Beats HDs (the ratings are irrespective of price and, had price entered into the equation, it's unlikely that the Beats would have even squeaked in there with a "D").

Also, people may need a bass heavy headphone for gaming and movies, plus specific music genera these days.

No one ever needs a bass-heavy headphone. If your game, movie, or music doesn't have enough bass when played through highly-regarded, high-end headphones (Sennheiser, Bowers & Wilkins, AKG, etc.) then complain to the company that released it. It's not the job of headphones to alter the EQ from what the artists built into the tracks.

----------

Umm, clearly I wasn't referring to you.

Then make it clear who you are referring to. It was not clear whether your swipe was aimed at everyone who was opposed to this buyout or only specific (unnamed) individuals.

 

[rmatthewware]

"We can't innovate anymore... let's just buy the first thing that celebrities endorse."

-Tim

Because Apple never buys a company for tech or talent.

Xerox's mouse, NeXt, Sound Jam (iTunes), Blue Fish Labs (iWork), Fingerworks (iOS), Quattro Wireless (iAd), Siri, AuthenTec (Touch ID), etc unavailable for comment.

It's not always where the tech comes from. Especially with Apple, it's how they put it together as a product that matters. And if Apple actually buys Beats, it's because a lot of smart people at Apple think it's a good idea.

 

[perealb]

If people think this acquisition is stupid just because they don't like the headphone quality, they fail to realise the bigger picture, and they are real bozos.

I agree with you. The suggestion is obviously stated there in the article and some people just don't get it.

 

[Warbrain]

free for 3 months. then $10/month ($15/month for 5 lines) after that.

Also,
I do prefer Beats to Spotify, but mainly because it saves me $5/month for my wife and I. It has all the music I could care to listen to so no need to pay more for Spotify.

Social is the only thing that keeps me with Spotify. I like my feed going to Facebook and following my friends to see what they're listening to.

 

[3282868]

Iovine is expected to leave his role as chairman of Interscope Geffen A&M records and use his music industry experience to help Apple secure future deals with music labels.

Seems the comments may be missing the "bigger" big picture.

Apple wants to grow its streaming music service, using Iovine to covet more labels to compete against Spotify, especially in Europe, is a massive bonus. They have an inside man who knows the "right people", has influence in the industry, knows the game, and can push the service further. I wouldn't be surprised if "iTunes Radio" is replaced with "beats radio".

The headphones, etc had to come with the package. Heck, they're not great and not worth the money, but they're certainly better than the earbuds Apple sells.

 

[CosmoFox]

Then they should not be spending Beats by Dre levels of money on headphones. Give $60 to Sennheiser and get something that outperforms the Beats.



Bull-fecal-matter. If you can't hear a big difference between Beats and quality headphones, then go to an audiologist and get your hearing checked.

You do not seem to understand what decibels (dB) are. The decibel scale is logarithmic. Something that is -3dB down is half as loud at that point, -6dB is 1/4th as loud, -9dB is 1/8th as loud, and so on.



What was I supposed to do? Hold them up to my telephone and call you?

So I'll prove it with quotes from the Monster Beats by Dr. Dre Solo review by Inner Fidelity (owned by the same company that owns Stereophile and Sound and Vision magazines).

You don't seem to understand how to have a discussion on the internet. If beats are so terrible, why are people buying them? Lots of snobs think they have superior ears, but double blind test will tell otherwise. People buy beats because they see people wear them, they are available everywhere, and they don't know any better. As bad as beats might sound, they are probably better than 90% of headphones we had growing up. Yes I made that number up. Your anger is misplaced. It's just headphones man.

 

[PlainviewX]

iTunes Ping making a comeback baby!