When Apple bet $3 billion on Beats Music and Beats Electronics in May, the music-listening world lit up with speculation about what the tech giant would do with its newly-acquired assets. The first big rumor suggested Apple would shutter Beats Music.
But it seems technology news headlines heralded the death of the $10-a-month steaming music service a little too quickly. Apple has since publicly denied plans to pull the plug on Beats Music, which was developed by a team of people who have spent their careers in music and has resulted in curated content that’s a big hit with big stars.
Indeed, Beats hit the market five years ago and has become a massive cultural hit. With the cache of its iconic co-founders, Dr. Dre and Jimmy Iovine, Beats has attracted the likes of Lady Gaga, Lil Wayne and Nicki Minaj to design their own customized Beats headphones and speakers.
An already iconic Apple becomes automatically more hip with Beats in its back pocket, but what happens to the music service remains up in the air.
A Measure of Logic
We asked Greg Sterling, Vice President of Strategy & Insights at the Local Search Association, for his thoughts on all the hubbub around Apple’s plans for Beats Music. He told us Apple has clearly denied plans to shut down the music service. That said, he noted, there is a measure of logic to the rumor.
“It's about not maintaining two separate brands around streaming music. The conventional wisdom is that Beats was acquired mostly for the streaming service. But Apple would like to promote iTunes Radio and not advance another brand at the expense of iTunes,” Sterling said.
“This merger of Beats Music into iTunes is probably going to happen but it's probably a decision whose timing has not yet been firmly made. Thus it may not happen immediately,” he added.
What Does the Future Hold?
Beats Music is cross-platform, which opens up an opportunity to market to Android users, so it’s not likely that Apple will do away with it altogether. And let’s remember that Apple isn’t just getting technology and hardware in the blockbuster deal, the company is also adding Beats co-founders Jimmy Iovine and Dr. Dre to its roster of talent.
Iovine, chairman of Interscope Geffen A&M Records, has been at the forefront of innovation in the music industry for decades. But many don’t know he’s also been a key partner for Apple and iTunes for more than 10 years.
The possibilities for the future of Beats Music and iTunes are many. It’s likely that Beats' founders and Apple talked about some of those possibilities before the merger, though Apple CEO Tim Cook didn’t announce any specific plans for the property.
“Even though there’s some value there, Apple could have built its own music service and its own headphones or acquired them from a less expensive company,” Ross Rubin, principal analyst at Reticle Research, told us. “They could have come up with their own audio sub-brand or licensed one. Tim Cook has said that it will become more apparent in the future why they acquired Beats. So we’ll see.”