Report: Apple To Relaunch Beats With $8 Monthly Charge, No Free Version
March 9, 2015 at 5:38 AM (PT)
APPLE executives want the music industry to fight back against free streaming, according to a report by RECODE's PETER KAFKA, planning to offer the relaunched BEATS service at $8/month without a free version as rivals SPOTIFY and YOUTUBE offer.
APPLE executives, including EDDY CUE and BEATS MUSIC's JIMMY IOVINE, have been arguing for a "paywall," reports KAFKA, and have been negotiating with major labels for licenses to launch a revamped version of BEATS, for which they paid $3.2 billion (NET NEWS, 5/13/14). APPLE is reportedly looking to line up high-profile artists to agree to give BEATS their music before other streaming services.
Over the past few months, executives from SONY MUSIC, WARNER MUSIC GROUP and UNIVERSAL MUSIC GROUP have stated their allegiance for a paid subscription model in place of the "freemium" model. “We want to accelerate paid subscription,” UMG's LUCIAN GRAINGE told the CODEMEDIA conference in FEBRUARY. “Ad-funded on-demand is not going to sustain the entire ecosystem of the creators as well as the investors.” GRAINGE said that SPOTIFY's free tier is a major reason for the decline in download sales at APPLE’s iTUNES store.
SPOTIFY research shows that only 12% of former iTUNES customers have become users of their service, and about 40% of that group are paying for subscriptions. YOUTUBE, another online source for free music, is also in the labels' crosshairs.
RECODE sources say APPLE intends to keep its free iTUNES RADIO service running, since it doesn’t think web radio services compete with music sales.