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Beats Music's Subscriber Base Pegged at Just 111,000

ghettochris said:
I disagree. I don't think music has intrinsic value, I think of it as an almost useless entertainment industry like pro sports and churches or writing. I think music should be free like all books, and you make your living by it from shows or merch.
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You seem to be unable to accept that entertainment has a value. People have been paying for entertainment for a very very long time. By the way books aren't free.

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The more we hear about this acquisition the harder it is to understand. As for the song royalty this may not be a long term rate, it's quite likely Beats negotiated a low start rate as its a startup service.

Those most positive thing I can say about the acquisition is its less stupid than facebook paying $19bn for WhatsAp. (note facebook did that acquisition for stock not cash, I hope Apple are going the same)
 
I don't get it. According to my calculations, if you add the label royalty and the artis royalty togeather, it's still around .14 cents per spin. How is that any better than what apple, pandora, and everyone else are already paying?

Are they buying it for the brand? They shouldn't, none of the hiptsers I know would be caught dead wearing beats headphones.

Are they buying it for the CEO's? They shouldn't, those CEO's couldn't care less about Apple. Look at what they did to the artists!

Are they buying it for the technology? They shouldn't, Apple is smarter than Beats.

Are they buying it for the subscribers? Clearly not. But they could make the mistake of being impressed by Beat's rapid growth from 0-110,000 users. They shouldn't though, because those users were attained by heavy promotion and a deal with AT&T. They should look at the retention rate of those users, as well as the demographic. I'm guessing they're unsavy, android users.

So what the hell are they buying???
 
ghettochris said:
I disagree. I don't think music has intrinsic value, I think of it as an almost useless entertainment industry like pro sports and churches or writing. I think music should be free like all books, and you make your living by it from shows or merch.
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We are all free to think what we want, but the law does not share your view.

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alchemistmuffin said:
Now you know why Apple is buying Beats mainly for headphone business?

Because NO ONE RENTS MUSIC!!!!!! This is indicative sign that people prefer to OWN music, not rent.

Like Steve Jobs said, no one wants to rent music. They want to own it. Still is true today.
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I don't think it's indicative of that at all. Streaming services are adding listeners dailey.
 
Zerilos said:
Lol. So true. The complete meltdown people experienced here over otherwise minor announcements is fascinating.

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Or Apple just wants to get into the subscription based music streaming buisness and you're overreacting. I'm guessing it's option 2.

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Or it could go up massively or remain at its current level. For what it's worth, their 2013 profits were $400 Million.
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Wait a minute... The only issue my post was supposed to raise was this idea that somehow Apple needs to become more fashionable. It doesn't. Do you disagree with that?

Second, I haven't really seen anyone answer this yet as I have browsed through the forums so maybe you can. If this deal goes through, for 3.2-3.5 billion dollars, it will close to 2-3 billion more than Apple has ever paid for any acquisition, ever. I don't think Apple has ever even paid more than a billion dollars for any other company. Doesn't that make this deal seem a bit more odd? I guess my point is, if I came to you a year, 2 years, 3 years ago, and said to you that Apple was going to spend 3 times more than any other acquisition in its history, is this the company you would have guessed or even advocated for? That's why I think this deal has been a genuine shock to a lot of people..
 
i make movies said:
For those who care:

3,200,000,000
/
111,000

=

$28,828 per user.
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That would be an interesting metric if Beats wasn't selling about $1 billion in hardware every year (and growing quite steadily). What's next? Your going to tell us what a great deal WhatsApp was for Facebook?

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osaga said:
Are they buying it for the CEO's? They shouldn't, those CEO's couldn't care less about Apple. Look at what they did to the artists!
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What are they doing to the artists other than paying songwriters about 1000x per person listening than terrestrial radio is.
 
lol I like to think Apple obviously have something else of extreme value for this amount of money but what if they have been duped, would be a great story..
 
hydr said:
$1.2 billion REVENUE 2013. High margins.
Less than 3x multiplier of revenues.

Apple 2013 $170 billion revenue. Marketcap $500 billion.
Less than 3x multiplier of revenue.

Apple paid what they thought Beats was worth, end of story. Not some insane amount to hire a couple of industry insiders.
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You claim "high margins" but unless you know return and warranty rate that means nothing.

Gross revenue is not an accurate representation of company value.
Unless you know net revenue with GAAP you know nothing.
 
Sick of these beats posts, I genuinely believe apple overpaid by miles on this one?

I don't think apple is out to jack song writers, you will see the service collapse if that is the actual royalty rate and labels will just boycott. I think a lot already have.

Beats have nothing to offer apple so I think we must be missing a piece of the puzzle here?
 
wovel said:
That would be an interesting metric if Beats wasn't selling about $1 billion in hardware every year (and growing quite steadily). What's next? Your going to tell us what a great deal WhatsApp was for Facebook?

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What are they doing to the artists other than paying songwriters about 1000x per person listening than terrestrial radio is.
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Selling $1 Billion in hardware is not profit.
Beat's value was a little over $1 Billion last September when they bought the 25% share back from HTC which owned it for about $265 million.

So we have a real value of what HTC and Beats thought 25% of the company was worth 7 months ago.

http://en.wikipedia.org/wiki/Beats_Electronics
"Beats' popularity was influenced primarily by its marketing practices, centring around product placement and branding deals with hip-hop and pop musicians; in 2012, NPD Group reported that Beats had a market share of 64% for headphones priced higher than $100, and was valued at $1 billion in September 2013."

Anyway, I don't see the value going up by 3x in seven months.
I'm not pulling numbers out of thin air, I'm going off real numbers and real valuation from a real sale.
 
Reds622 said:
And you know what happens next, right? Slowly the products become less about tech quality and more about "fashion," "look," etc. That is not something that I am looking forward to at all. Apple is supposed to make fantastic TECH products that also happen to be designed aesthetically exceptionally well. Not designed aesthetically exceptionally well that also happen to be TECH products. That type of subtle shift I do not think is good for the long term position of Apple. Once the quality starts to be degraded, all bets are off. So no, I do not think this would be a good thing at all.
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This is what bothers me. Although Apple has a reputation as a "cool" brand, underpinning that are great, innovative, extremely well engineered and designed products. Beats stuff is the opposite. They charge a fortune for a product as dull as headphones and even then they can't produce ones that sound halfway decent.

I could understand Apple acquiring a brand like Tesla, they have similar values. Beats is just a crap product + hype.
 
mabhatter said:
Not really.$3 B for a company putting $1b in cash every year is a good deal. It starts paying for itself after 5-6 years just from headphones.

Apple has been stonewalled with labels, that's the Angle here.
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In most streaming arrangements, all contracts are voided on sale of the company. So, buying Beats, Apple would still be stonewalled assuming their label contracts are similar to those other companies have drafted.

The only possible angle here is if Beats intentionally structured their contracts for an eventual buyout. It's possible, but seems unlikely. If they did, they they likely sacrificed other aspects of the contracts for transferability on buyout, so all bets are off as to the actual value of those contracts.

How many people is APPLE getting to pay the $25 for iTunes Radio and $25 for iTunes Match? I bet Apple conversion numbers to PAYING customers are equally dismal after two years of trying.
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First, it is $25/year for both (iTunes Match + ad-free iTunes Radio), and iTunes Radio with ads is completely free and installed with every iOS or iTunes-running computer.

No numbers here, but personal experience is that a lot of people are using Radio. How many? I'm not sure. We'd need some insider information to judge that. I see it being used a lot around the youth softball fields, where last year I was seeing lots of Pandora streaming.

The thing is: Beats is a fundamentally different model from iTunes Radio. Radio is a "you tell me what you like and I'll play that kind of music". Beats is a "you tell me what song to play, and I'll play it" service. It's much more per month, and offers much more control to the user.

Beats has the horse Apple WANTS to run in the market. Eddy Cue is only so good and labels don't want to allow Apple to win again wether they get money or not.

It will be interesting to see how Apple ties services together. I want to see the hair pulling design fights between Dr. Dre and Sir Johnny!!! (YouTube's we need this!)
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I really can't see any attraction to a Beats acquisition at all. They have no subscriber base to speak of, the contracts won't transfer, the headphones are overpriced bass-heavy crap which sell thanks to gaudy fad-based marketing, and they don't have any intellectual property to speak of at all. Maybe eventually this looks like a brilliant move, but I frankly see nothing at all that Apple should want here, even at a tenth of the price.
 
Rog210 said:
This is what bothers me. Although Apple has a reputation as a "cool" brand, underpinning that are great, innovative, extremely well engineered and designed products. Beats stuff is the opposite. They charge a fortune for a product as dull as headphones and even then they can't produce ones that sound halfway decent.

I could understand Apple acquiring a brand like Tesla, they have similar values. Beats is just a crap product + hype.
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I think it's also funny that a lot of the people on here defending this deal are most likely the same ones that would be very much against such a deal if it was offered by a poster on this forum. Now that this news has leaked to the media, all of a sudden those same posters are all about such an acquisition and its potential benefits. I think it is safe to assume that no-one around here saw this type of acquisition coming. And I think it is also safe to assume that if this was just a suggestion by a fellow poster on here to make such an acquisition the same people on here now defending would most likely be against it.

Again, that we know of, Apple has never made an acquisition of more than 1 billion dollars in its entire history. They have made some fantastic and innovative products. Now they are about to spend close to 3 times more than any other acquisition in its history for a company that I think all of us can agree is no sure thing.

To be honest, I think we can all probably agree that Beats is closer to the "overrated" spectrum of tech companies than "underrated." While their performance in the market so far is quite admirable, I don't think anyone can argue that going forward they were/are a 100% sure thing and not a "trend" in the market-place susceptible to their bubble being popped when the masses move on to the next trendy product. Is it likely? No. Is it possible? Yes. Should Apple be spending this type of money on that type of corporation? I don't think so.
 
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Simple. Beats been 'Cook'ing the books.
Cook: " 'I've' made a $3B mistake. " :eek:
Maybe it was all that BLING they were wearing.
 
I'm new to writing comments on MR, but I decided to join the talk.

I get the feeling everyone is missing the point on the Beats acquisition. Whether or not Apple has any thing in store for the streaming service, it probably looked at the streaming as a little bonus. What Apple is really after, I think, is a hardware and Dre&Iovine Co. Has anyone on MR read the supposed blueprints on IEM with biometrics? Or the Shazaam acquisition? Apple has probably been able to see clearly what consumers at Apple buy when they buy Beats brand. If the smart IEMs rumors are to be believed, then I imagine Apple would also want some of Beats patents and designs. ...et cetera.

Disclaimer: I prefer my Shures over Beats and Bose noise-canceling over Beats. Just like Beats headphones, the acquisition was a bit overpriced, but Apple's cleverness might not be as boring as getting a streaming service.
 
111,001. I just signed up and am simply amazed that after 4 days Beats has played 80% of my all-time favorites. It's uncanny how the service works.

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Do the artist get a check that amounts to 12 cents for every 10,000 times their song is played? How do the artists make any $ with 110,00 subs. It would take them 10 years to receive a $100 royalty check. Why don't the studios want to deal with Apple? Is it that Apple wants to pay below market royalties or what is it? Any insight on Apple's relationship with the music industry? They've paid out hundreds of millions to artists since the inception of iTunes. IMO, Apple saved the industry from Napster et al, and now they'll save it again by "forcing" consumers to pay for music streaming instead of consumers getting free music supported by ads. I don't see how ad revenue can come anything close to users paying $10/month to listen to streaming music. I'd rather pay the $10 than have ads in my music.
 
iChrist said:
And it's not even close to as good as the major players, spotify and rdio.
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So you've used all three and conclude Beats is the worst? I haven't used Beats but on the latest Macworld podcast Chris Breen was really talking it up.

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alchemistmuffin said:
Now you know why Apple is buying Beats mainly for headphone business?

Because NO ONE RENTS MUSIC!!!!!! This is indicative sign that people prefer to OWN music, not rent.

Like Steve Jobs said, no one wants to rent music. They want to own it. Still is true today.
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No one rents music? You serious? Sorry but subscription services like Spotify are what most people want these days. iTunes downloads are declining. Steve Jobs was wrong about this.
 
techwhiz said:
Selling $1 Billion in hardware is not profit.
Beat's value was a little over $1 Billion last September when they bought the 25% share back from HTC which owned it for about $265 million.

So we have a real value of what HTC and Beats thought 25% of the company was worth 7 months ago.

http://en.wikipedia.org/wiki/Beats_Electronics
"Beats' popularity was influenced primarily by its marketing practices, centring around product placement and branding deals with hip-hop and pop musicians; in 2012, NPD Group reported that Beats had a market share of 64% for headphones priced higher than $100, and was valued at $1 billion in September 2013."

Anyway, I don't see the value going up by 3x in seven months.
I'm not pulling numbers out of thin air, I'm going off real numbers and real valuation from a real sale.
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Apple was valued at around $150b less during this same time period you speak of. Just because HTC thinks Beats is worth a billion doesn't mean they can't be worth 5 times that.
 
No one rents music my ass. The reason that subscription services weren't successful 10 years ago is because they couldn't translate to mobile devices(iPods at the time) With iPhones and other smartphone platforms have made subscription services a viable. iTunes is dead. Get it in your head.
 
Meanwhile, while Apple is throwing away 3 billion dollars on Ballmer type deals, At&T is buying Direct TV for 50 billion. Wouldn't it make far more sense for Apple to save their billions and go for someone like DirectTV who already has all the network deals, infrastructure and paying customers Apple TV craves sewed up?
 
WinstonRumfoord said:
I don't need a law to make sure I get paid.. Neither does my neighbor, or my other neighbor. Why do "songwriters"?

I think I'll oppose this one..
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Lol. You really don't think there are laws making sure you get paid? You would be incorrect sir.
 
Lesser Evets said:
Either there is a strategic aspect we have no idea about, or Apple's headquarters moved to Colorado to get closer to enlightenment.
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I think it makes a lot of sense personally. I have no idea what a reasonable price would be, but the profits made off the headphones would pay off this deal in less than a decade. It's almost like getting the streaming service for free. The service launched Jan 21st and in 79 days picked up 111,000 paid subscribers in the USA alone (Beats still not available outside of the states). Extrapolated this works out to over 500000 paid subs in the first year, more when they expand to Europe and Canada and Asia. This really is not bad.
 
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