Tuesday, January 21, 2014

Hip Hop Mogul Dr. Dre Launches "Beats Music" Streaming Service TODAY- partners with AT&T

The hip-hop mogul, backed by a coalition of high-profile music industry veterans, is attempting to solve a problem that has thus far vexed the struggling music industry: creating a streaming music service that makes big money while still putting cash back in artists' pockets.

Dre's "Beats Music" streaming service—a name that builds off his successful "Beats by Dre" headphones—launches Tuesday.

The stakes are high: Streaming has long been "the future" of the music industry, as record sales sag in favor of online downloads. Further adding to the industry's woes: Digital music sales are down for the first time since iTunes launched in 2001 as customers turn to streaming services instead.

But while streaming has long been seen as the future of the music industry, it has thus far been more potential than profit. Streaming grew 32 percent in 2013, according to the Nielsen Soundscan, but the business's big names—namely Pandora and Spotify—reported annual losses. And it's no picnic for artists either, who complain about the tiny returns they see when streaming customers listen to their songs.
Dre, nee Andre Young, thinks he can turn the corner.

At first glance, Beats sounds pretty similar to Spotify. For $10 per month, Beats' subscribers will be able to access a catalog of 20 million-plus songs, a selection approximately the same size as Spotify's. Like Spotify, subscribers can make their own playlists, or listen to playlists tailored for their tastes. Beats is made to the smartphone age, with a sleek, mobile-first interface.

But what Dre, alongside partner and fellow music biz whiz Jimmy Iovine, hopes will separate Beats from the competition is its team's deep understanding of music. While Pandora and Spotify use computer algorithms to pick the next song on your playlists, Beats has a team of in-house music aficionados to back up its algorithms.

"It's all about what song comes next," Iovine told news website All Things D, "Everyone wants to know what song comes next."

And then there's Beats' major difference: Dre isn't giving anything away for free.
Spotify has over 24 million subscribers worldwide, but only a quarter of those are paying subscribers. The rest use Spotify's free, ad-based service, which earns significantly less that its subscriber services. Beats, however, is betting entirely on subscribers.

It's hard to compete with free. Without a free, ad-based alternatives, skeptics question Beat's pie-in-the-sky, entirely paid business model and doubt its ability to gain traction.
Beats expects to make up the difference through a mix of star power, corporate partnerships, and expanded demographics.

Beats has a plum agreement with AT&T—a coveted corporate partnership for an industry moving toward mobile—that gives Beats direct access to the telecom's 108 million customers, making it easy to bundle Beats' fees with phone bills. A $15 per month family plan allows up to five accounts.
Beats has also partnered with Ellen DeGeneres and Target, and it plans to run an ad during the Super Bowl.

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