Beats Electronics, the fashion headphone behemoth led by Jimmy Iovine and Dr. Dre, has officially announced its plans to launch a music streaming service in the U.S. on Jan. 21. Dubbed Beats Music, the $10-per-month subscription service will enter an already crowded field. Major brands like Apple, Google and Sony, each offer an on-demand music service, and Internet startup Spotify, despite its small size, attracts 6 million paying listeners worldwide, and several times that with its free ad-supported option. Beats has chosen to forgo the freemium business model altogether. It will offer just a single monthly subscription plan, although there will be a free trial period.
The move by Beats into the streaming market has been long anticipated. In 2012, Beats Electronics bought the music subscription service Mog, with executives stating their intention to build an “end-to-end” music service. From a features standpoint, Beats Music doesn’t appear to offer much that’s new. Users who know exactly what they want to hear can choose from the same 20 million song catalog that competing services have licensed from the major record labels. You can download tracks for offline listening, and like other paid subscription offerings, there are no ads to interrupt the music. The Beats Music mobile app will work with iOS, Android and Windows Phone devices.
Beats’ path to success relies, not so much on peeling off customers from existing services with the lure of better features, as much as growing the entire streaming market by a significant margin. With music download sales declining for the first time since the launch of iTunes, the music industry has ample motivation to see streaming service expand beyond its tech-savvy, largely male demographic. And the Beats Music paid-only model is thought to mean higher royalties for the record companies, though no one is divulging licensing terms. Targeting a mainstream audience is an obvious move. The key question is whether that audience is willing to pay $10 a month. Of course, back in 2008, no one thought people would pay $200 for headphones to plug into their phones.
