Last month, the power trio of Trent Reznor, Dr. Dre, and Interscope co-founder Jimmy Iovine announced the beta launch of Beats Music, the streaming music service that originally began as Daisy back in December 2012. During the beta run, open registration was available to users worldwide and select number of artists and “other influences” tested the service and provided feedback. Now, with the testing phase complete, the service has announced Tuesday, January 21st as its launch date.
On the surface, Beats Music already seems like a heavyweight of the industry: not only does it have three musical icons at its helm, but it also has a $60 million investment and subsequent backing from Dre and Iovine’s Beats Electronics (which last year generated $1.5 billion in revenues). But in an extended profile with the New York Times, Iovine and Co. argue that Beats Music’s real power comes from its ability to work outside the confines established by competitors like Pandora and Spotify.
For one, Beats Music will be available exclusively as a subscription service. In addition to a $10 individual plan, Beats has teamed with AT&T to offer a $15 family plan, where up to five different users have access to one Beats account. The integration with an American phone carrier is one of the first by a streaming music service, as neither Pandora, Rhapsody, or Spotify offer such bundles.
Beats will also expand upon the pools of data and automated musicological analysis that other services rely upon almost exclusively. As Beats Music CEO Ian Rogers explained to the Times, these computer algorithms often “misunderstand the music”, using the example of Art Garfunkel being recommended to fans of Paul Simon.
Instead, Beats Music will supplement the use of algorithms with recommendations from a sizable pool of editors and guest programmers. As an extension of that, several “curators”, as Beats Music calls its staff, have devised intriguing side features. Among them is Right Now, an automated listening game designed by Reznor.
In the game, users can build an ad hoc playlist incorporating four different variables: a place, an activity, a person, and a genre of music. For instance, if someone typed in, “I’m at the beach & feel like pre-partying with my friends to dance-pop”, the app would yield results for the Chemical Brothers, Lady Gaga, and Janet Jackson.
But that’s not Reznor’s only contribution. As the Times explained, “He is the service’s main visionary, and his involvement lends credibility to a business that has become plagued by complaints from artists about economic fairness.” Reznor was one of the main forces pushing for the subscription model: with no free tier available, that means higher royalty rates for all artists. (Unlike Spotify, though, Beats Music hasn’t specified its artist pay rates).
According to Reznor, the subscription model was the only one that made real sense, using his own music with Nine Inch Nails as a “kind of petri dish” by having previously explored the mystery-marketing model, the free model, and the multiple-price-points model.
Despite all the added bells and whistles, Beats Music will have access to virtually the same artists and licenses as its competitors. In their own review, the Times offered the following: “Tested by a reporter at a New Year’s Eve gathering, Beats playlists like ‘Best of Bossa Nova’ and ‘Downtempo Dinner Party’ set the mood well, and Right Now proved an ideal party game. Yet the playlists seemed no better or worse than the well-chosen and witty playlists on the free site Songza, a Pandora competitor that has thousands of playlists but, because of licensing rules, restricts users’ ability to choose specific songs.”
As such, Beats Music’s success will hinge less on what free music it offers and instead whether it can lure customers away. Its biggest competitor, Spotify, hasn’t announced new user numbers in over a year. However, during a recent private music industry gathering in Los Angeles, attendees indicated that Spotify had nine million users worldwide, with two million in the US. As Rogers notes, the potential market for on-demand streaming music is much higher, putting the figures at over 50 million in the US. As comparison, Netflix has 31 million subscribers, and Sirius XM Radio has more than 25 million.