Back in May, Apple made a $3 billion deal to purchase Dr. Dre’s Beats and open up speculation about the future of the highly popular audio and music company. In the deal, the iPhone maker not only acquired the company’s successful headphone line, but also the Beats Music online music service and it was thought that Apple might integrate the online streaming music platform into iTunes and become even stronger in the digital music world.
Now, over four months later questions have arisen on how important is the Beats name really to Apple. For music streaming online, it does not appear to matter at all to the Cupertino based company.
TechCrunch, a technology news site, reported Monday that Apple planned to end the Beats Music streaming service. The report was from an anonymous source and quickly made its way around the internet. It gained enough momentum on-line that Apple spokesman Tom Neumayer made a rare statement flat-out denying the report.
While Apple denies the intent to end Beats Music, it is still unclear what the plan for the online music streaming service is. Both industry analysts and Wall Street experts suggested that Beats would be slowly merged with iTunes leaving the only remnant of Dr. Dre’s former company the widely popular headphones and various audio products.
It was unclear in May what the actual deal with Apple to buy Beats meant for either company. The idea of the streaming service represented a change in how Apple handled digital music and merging the service in with iTunes made sense. However, Apple executives said Beats Music would coexist with iTunes.
Some viewed Beats Music coexisting into the future with iTunes as counterproductive for either service for Apple. It seemed that the obvious choice would be for the merger into a single brand, and iTunes has the stronger history. For the last decade, iTunes has dominated downloaded music sales. However, recently, downloading music has begun to decline as streaming music is on the rise. To keep iTunes number one, iTunes streaming, powered by Beats Music makes the most sense to industry experts.
After being introduced to the online music streaming world in January, Beats Music is estimated to have signed up 250,000 subscribers. This is a much smaller group of subscribers than the leading subscription service Spotify, who have 10 million paying users and 30 million ad-based free users.
The idea that Apple would keep Beats running would go against the normal acquisition process for the iPhone maker. Typically, Apple buys a company, moves the employees into the appropriate divisions at Apple and then shut down the acquired company. In 2009 that is exact ally what occurred to music service Lala. After buying the company the workers were moved to iTunes and the service was terminated.
Beats Music employees have already started to be placed in strategic departments. Beats Music chief executive Ian Rogers was placed in control of Apple’s iTunes Radio, which has struggled against the highly popular Pandora.
Right now, the future of Beats Music is known only to Apple. The potential fate of the streaming music service has been a source of speculation since the acquisition, and Apple is being very quiet about what will actually happen to Dr. Dre’s company. Apple CEO Tim Cook said that he was totally sold on music subscription service, however, Apple did not include a Beats Streaming app with the new iPhone or Watch earlier this month.
The future of Beats will just remain a mystery until Apple makes their intentions publicly known. Consumers should be glad to see that it appears Apple will not touch the Beats headphones and ear bud products. People are buying the headsets, not because they are quality products, but because they are cool, and as long as people continue to buy, Apple will sell them.
By Carl Auer