Apple plans to bundle Beats Music – the music subscription service it purchased along with rapper Dr. Dre's massively profitable headphones company for $3 billion – with its iOS software early next year, according to reports as well as sources in the music business. The operating system for iPhones and iPads reaches hundreds of millions of customers, potentially giving Apple a boost in the battle over streaming against competitors such as Spotify and YouTube.
"Subscription hasn't yet gone mainstream, and it is the future of the music business – so anything that Apple can do to take it to scale as quickly as possible is going to be extremely valuable," says a source at a major record label. "Apple didn't do downloads first, but they did downloads the best."
That reaction is typical of record executives, who've licensed their catalogs to streaming services and invested millions of dollars in Spotify and others. It's also contrary to the views of Taylor Swift, who removed all her music from Spotify last month the week she released 1989. She sold nearly 1.3 million copies of the record that week.
Swift and other artists, including Cracker's David Lowery and former Talking Head David Byrne, say the record business' shift from selling CDs and downloads to selling YouTube and Spotify ads and $10-a-month subscription services is reducing their royalty payments to an absurdly low amount.
Apple is attempting to negotiate lower streaming rates, according to The New York Times, possibly allowing customers to spend $5 a month for Beats Music rather than $10, though that number has yet to be confirmed. When Beats launched in early 2014, its executives made pointed remarks that they would charge for the subscriptions rather than including a Spotify-style free service buttressed with advertising. But Beats has drawn only 110,000 subscribers so far, according to reports, compared to Spotify's 50 million, of which 12.5 million pay $120 a year. The Times speculated Apple would incorporate Beats into iTunes.
In the meantime, new streaming services are popping up all over the place. YouTube launched its own paid subscription service, Music Key, to select users earlier this week as a beta test, and Tidal arrived in the U.S. in late October with high-quality audio files.