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Apple is aiming to grow its streaming music business against established competitors including Spotify by unveiling a new $10-a-month service that it hopes will make paying customers out of consumers who presently are getting their streaming music elsewhere.
The idea of Apple offering such a service has been around for a while, especially since the company’s purchase of Beats Electronics in May 2014, which included the Beats Music streaming division as well as that company’s headphone business. Now Apple is expected to announce the new service at its Worldwide Developers Conference (WWDC), which begins June 8, according to a June 1 report by The Wall Street Journal.
In addition to a $10-a-month unlimited on-demand streaming offering, Apple also reportedly will “augment its free, ad-supported Internet radio service with channels programmed and hosted by human DJs,” the story said. The monthly plans, however, won’t allow access to Apple’s entire music catalog, the report continued.
“Music-industry executives see Apple’s all-in bet as a watershed moment for streaming music that could move the technology from early adopters to the mainstream,” the Journal reported. “Apple can aggressively push its hundreds of millions of iTunes customers—most with credit cards already registered with the company—to embrace a subscription model on the same devices where they listen to downloaded songs and albums.”
In early May, reports surfaced that Apple had been having trouble securing all of the deals it needed to access the music content from record companies so it could be offered to customers by the launch of the new service.
Apple is still continuing to get those agreements finished, the Journal reported. Talks are continuing with the three biggest global music companies—Vivendi SA’s Universal Music Group, Sony Corp.’s Sony Music Entertainment and Warner Music Group—the story reported, according to sources who are familiar with the discussions. “Many in the music industry expect such deals soon. If Apple doesn’t get its licensing deals done before the conference, it could delay its announcement long enough to wrap up negotiations, a scenario some in the music industry described as possible but unlikely.”
The new streaming music services would be released as part of an update of iOS, and the company will also reportedly offer an Android version, too.
The service will feature “channels” set up in formats like broadcast radio stations, and they will include “high-profile personalities” as DJs, the story reported. “Pandora-style ‘custom’ stations are expected to be available alongside the new programmed channels.”
To start, Apple will keep the existing Beats music streaming services running until it gets the new service working reliably, when it could then migrate customers to the new platform, sources told the Journal.
In early May, reports surfaced that U.S. antitrust officials were looking into Apple’s practices in forming partnerships with music content companies that would provide the content received by customers under the new streaming offering. The antitrust probe into Apple by officials from the Federal Trade Commission is looking to determine if the company has been using its position as the largest seller of music downloads through its iTunes store to put rival music services like Spotify at a disadvantage.
When Apple bought Beats Electronics in May 2014, it paid $2.6 billion in cash and $400 million in Apple stock. Beats Electronics, founded by rapper Dr. Dre and pop music producer Jimmy Iovine, makes high-end headphones and also operates Beats Music, the popular streaming radio service.
In September 2014, Apple denied widely circulating rumors that the company was planning to actually shut down Beats Music just four months after it bought the company, according to an earlier eWEEK story. While the shutdown rumors were flatly shot down by Apple at the time, a company spokesman refused to give details about what might lay in store for the streaming music division. The denial of rumors was in itself interesting and unusual because Apple, like other companies, usually remains stoic about reports and rumors it doesn’t want to discuss publicly.
Beats launched Beats Music, a $9.99-a-month streaming music service for iOS, Android and Windows Phone devices, in January 2014, according to a previous eWEEK report.