Is Apple barking up the wrong streaming-music tree?

Great.

Just as rumors fly over a pending deal by Apple to buy Beats Music, the streaming service created by hip-hop legend Dr Dre as part of his headphones brand, a new report suggests that not only does Beats have a puny number of followers compared with streaming giant Spotify, which claims more than 24 million users around the globe, but Beats is also apparently kind of cheap when it comes to paying royalties to the artists whose music is actually doing the streaming.

According to a leaked royalty report detailed in a post on the Guardian’s website, Beats

had just 111,000 subscribers in March, according to a leaked royalty report. Since its launch in January in the US, Beats Music has added 49,371 individual accounts and 61,621 “family” accounts, which can have up to five users, according to a royalty statement published by the music industry blog Trichordist.

And there’s more in the report suggesting Apple might want to think twice about shelling out a reported $3.2 billion for a company that, despite its killer headphone technology, is still relatively wet behind the ears. It seems that some or many of those 111,000 subscribers may have entered the Beats tent with a discounted ticket:

because the US mobile phone provider AT&T has been offering a 90-day free promotion, it’s unclear how many of those Beats accounts are paid-for. The Beats Music family plans were all offered with a 90-day free trial, which means it is unclear whether many of them are actually paying for the service, given it only launched in January. It is also unclear how many users each family plan has; the 61,621 family accounts could account for up to 308,105 people.

Apple is rumored to be pursuing an acquisition of Beats, including its headphones, speaker and streaming music brands, and Dre hinted last Friday that the deal was real, announcing he had just become the “first billionaire in hip-hop”.

Still, no word yet from either Beats or Apple whether a marriage is in the works.

Photo of Dr. Dre by Getty Images

 

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  • WAM

    this is such a low rent low brow shakedown – HOW the heck with + $150 billion you don’t go after: NFLX TESLA, SPACE X, TWITTER – take a nap…….yawn……Hire Musk, Mulally relegate Mr. Warehouseman/logisitician Cook to COO is way beyond me – u r not taking that $ with you to the next life with he clock tikin

    • henry3dogg

      Because Beats is much better value and Apple can grow it.

    • D Leighton

      wow…thinking BIG…they have opportunity to be ‘anything’ they want at this point…acquiring visionaries would be a great move – hire the next jobs or edison or ford and let them take apple to the next level – whatever that is ?!

  • Steve Hammill

    >>>its killer headphone technology

    The Beats cans are certainly stylish, in fact, they have some flavor of patent on the “ornamental design” of the headphones.

    However, to the best of my knowledge, Beats didn’t pioneer noise cancellation, the new cord technology (which us broadcasting guys “invented” in the 70s), or wireless cans. OBTW-Wireless cans are still not quite ready for prime time – any brand.

    Beats cans have so much bass that I’d consider them unusable for studio use. They certainly are not as good as the studio cans I wore 10 hours a day for 30+ years.

    But people do like them…so if you want to consider “ornamental design” “killer headphone technology” then “I’ve got some waterfront property for you in Arizona” to sell you Mr. High-tech Journalist.

    🙂

    • henry3dogg

      “Beats cans have so much bass that I’d consider them unusable for studio use”

      I won’t argue. But the demographic that buys them, buys them for that base.

      And that’s over 60% of the US market for headphones costing over $100.

      • Steve Hammill

        YUP!
        It’s the ornaMENTAL design…emphasis on “mental” 🙂

        Actually, I like the beats design, just don’t like the sound for my uses.

  • henry3dogg

    Given revenue of $1.2B last year, $3.2B is only 2.6x revenue and the margins on those headphones should be decent. They’re not being sold cheap.

  • bshammy

    Apple isn’t buying Beats for their headphones – $1.2 billion isn’t even material to Apple’s business. I suspect Apple is after technology and Beat’s artist marketing service.

  • Robert Petry

    120,000 subscribers to Beats many are free subscribers thru AT&T. Just resurrect Napster much cheaper lol

 
 
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