Apple Inc. has asked more than a dozen artists, including Taylor Swift and British band Florence and the Machine, to sign exclusive deals for some of their music to be streamed on Beats, Bloomberg News reported, citing people familiar with the matter.
Such deals are intended to lure music lovers who are loathe to pay for subscriptions.
Tidal, a Beats rival owned by Jay Z and 16 other musicians, is using a similar strategy to compete with platforms like Spotify and YouTube that let people listen for free so long as they sit through ads.
The offering from Apple — whose iTunes is the world’s largest seller of music — will be the most-watched subscription-only effort yet, the news agency said.
Beats Music will be retooled and re-launched this summer, possibly with a new name, the report said. Subscription plans include US$9.99 a month for individuals and US$14.99 for families.
Tidal, which charges US$9.99 for a standard monthly service and US$19.99 for high-fidelity, is hyping exclusives from two of its owners, Beyonce and Rihanna.
“Given how easy it is to obtain free streaming music on the web, any subscription payment gateway needs to involve a differentiator to warrant a pay model like that,” said Tom Webster, vice president of strategy and marketing at Edison Research.
For Apple it could be “the power of the Beats brand. That’s the X-factor.”
Apple bought Beats Electronics, a headphone maker and streaming service, for US$3 billion in May 2014, its biggest acquisition ever.
Co-founders Jimmy Iovine, former chairman of the record label Interscope Geffen A&M, and the rapper and producer Dr. Dre joined Apple to work on its music platforms: iTunes, which has dominated the market since it opened in 2001, and two-year-old ad-supported iTunes Radio, which competes with radio sites from Pandora Media Inc. and IHeartMedia Inc. Pandora also sells an ad-free tier, for US$4.99 a month.
Beats is challenging Google Inc.’s YouTube, the top online destination for music, and the four-year-old service from Spotify Ltd. Spotify has more than 60 million users — with a quarter of them buying its US$9.99-a-month ad-free subscription. YouTube has a new ad-free service called Music Key that also costs US$9.99.
The industry has embraced streaming as other formats have faded, and as its income has shriveled. Recorded music sales were US$40 billion in 1999 and US$15 billion in 2013, according to the International Federation of the Phonographic Industry.
Streaming revenue surpassed CD sales in the United States this year. If trends continue, streaming in 2016 could exceed downloads, which have been declining, according to MusicWatch.
Last year, revenue from streaming subscriptions, web radio and music-platform ads grew 29 percent to US$1.88 billion, according to the Recording Industry Association of America. Subscription streaming brought in US$799 million.
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