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Apple to kill the subscription aspects of their Beats acquisition?

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Bill Davis
Apple to kill the subscription aspects of their Beats acquisition?
on Sep 22, 2014 at 9:39:54 pm

When Apple acquired the Beats brand, many opined that the Beats subscription service was one of the main targets of the acquisition. Now reports are appearing that Apple is actually considering dumping the subscription part of the Beats service.

http://appleinsider.com/articles/14/09/22/apple-reportedly-planning-to-shut...

If so, I'm gladdened that Apple may be bucking the "easy income" corporate trend of forced direct lifetime payment extraction from their customer base.

My language. My opinion.

YMMV

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Marcus Moore
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 22, 2014 at 11:34:17 pm

This has already been refuted by Apple directly.

http://recode.net/2014/09/22/apples-beats-music-brand-may-go-away-apples-be...


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Andrew Kimery
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 22, 2014 at 11:42:46 pm

Rebranding it and rolling it into iTunes makes sense. Music subscription services are the only growth angle for music distribution these days.

[Bill Davis] "If so, I'm gladdened that Apple may be bucking the "easy income" corporate trend of forced direct lifetime payment extraction from their customer base.
"


Why bother with subscriptions (besides iCloud and iTunes music match of course) when 1. you get a 30% of any subscription service sold in the Apple App Store and 2. you've mastered planned obsolescence? ;)


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Tim Wilson
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 22, 2014 at 11:49:34 pm

Whatever Apple's plans are, it doesn't change the fact that music has been proven to be viable via a subscription model. Spotify alone is on track to pass iTunes music sales revenue later this year. It would be sheer insanity for Apple to let iTunes music sales keep dropping when the alternative is out there, available, and eating their lunch.

Oh wait, it's not OUT THERE. Apple has it in house. If you don't think it's worth $3 billion to Apple to stop the bleeding in its music business, you're wrong. Sorry to be so blunt, but this is simply a fact.

I really don't think people here have reckoned with this. iTunes is about to no longer be the biggest source of revenue for the music business. Spotify is. And Spotify is going up, and iTunes is going down. And Spotify is just one subscription vendor.

And Apple is not in the business of being in declining businesses.

Hey, wait a minute, you know what else works for subscriptions besides music?

Television. People have been subscribing to it for generations. If they want to buy it, they certainly can -- but which is a more viable long-term model for TV watching? People WATCHING it, or people OWNING it? Watching. NOT owning.

You know what else works for subscriptions besides music and TV?

Movies. Movie streaming and rentals have been skyrocketing of late, while sales of disks plummet. Even digital sales are next to nothing. So which is the more viable long-term model for home video? People WATCHING it, or people OWNING it. Watching. NOT owning.

There is admittedly an age bias at work here. Ownership and age are inversely related. It's not shocking to me that many geezers are beside themselves thinking about music streaming, when in fact they've been doing it with TV virtually their entire lives, and all but the most hoardy geezerific have streamed more in their short time on Netflix streaming than they've bought in their long, long lives. Such long, long lives. Very, very long.

So relax, Bill. You're already enjoying streaming media. You can still buy dang near whatever you want. Apple isn't about to let the iTunes music business go away, but they won't let it keep going down the drain with the sales model either. They're doing what they've done so many times before -- let other people do the experimentation first, buy an up-and-coming player, then follow the money while upping the interface game. I can't imagine that a streaming iTunes will look anything like Beats (we can only hope), and lord knows that Spotify is ripe for being bettered.

This is going to work out fine for you. It's going to work out fine for Apple, too, as long as they saddle up for an ALREADY ESTABLISHED streaming business that's pulling ahead of them.

And lo and behold, they are.


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Mitch Ives
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 24, 2014 at 2:21:35 pm

Tim, I realize that your comments are directed at media delivery, and FWIW, I agree with you. Though, I don't necessarily agree with you that being anti-subscription is an age related thing.

At the same time, I also understand Bill's point. Even those in denial have to acknowledge that software subscriptions have not gone well for those companies that have tried it... and please don't tell me they're doing this for the consumer. They aren't. They're doing it for the money and to even out cash flow.

Under the old method, you had to generate an update that provided value, otherwise people would sit it out and wait for an update that was meaningful, and worth the money. With the subscription model, you have a captive audience... in essence you're pre-paying for upgrades, without knowing whether there will be anything of value. That's a non-starter for me... and apparently I'm a member of a very large group...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Tim Wilson
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 24, 2014 at 6:29:06 pm

I'm not commenting one way or another on the subscription software front. I'm just making the observation that subscription music and TV, and subscription software have nothing to do with each other.

I'm making the further observation that antipathy to software subscriptions is leading some people to make exactly the wrong reading of Apple's plans.

a) Apple is not killing off their subscription PLANS, and

b) it makes no sense to compare ownership vs. subscription in media to ownership vs. subscription for software, which

c) all but the most ardent philosophical holdouts know, because they already consume the majority of their media through a subscription.

I think that Apple adding subscriptions to their mix is critical for their music business. Music revenue per iTunes user is down by 50% in the past 2 years alone, and the decline is accelerating, because the sales-based business model for music is rapidly declining, and is being replaced with subscriptions.

Not as fast as video sales, mind you, where the sales model has cratered.


You can be sure that Apple noticed that the average Spotify customer spends 2-3 times in a MONTH what the average iTunes customer spends in a QUARTER. The money is INSANE, because when given a comparable selection of music, people ARE CHOOSING to spend MORE to subscribe than they were spending to buy, and they're happier with it.

This is not a debate. It is happening. Apple has watched Spotify pass its revenue in Europe, and now that Spotify is available is in the US, it's happening here too. Which is a big part of why Apple bought Beats. (Although it would have made a good business deal just for the headphones.)

This is also not Apple's first move into streaming music. They bought Lala in 2009, a much smaller service (only an $80 million cash/$80 million stock and options deal), but technology that Apple moved into iTunes radio.

So, yes, Apple killed Lala, but rolled up the technology, before greatly expanding it. And yes, Beats Music as a standalone entity will die, but only after Apple has rolled up its technology and greatly expanded it. Apple's move into subscription music is accelerating, because around the world, where high-quality options are available, people are in fact spending MORE money to SUBSCRIBE to music than buy it.

Just as people have been spending more money to SUBSCRIBE to TV and movies than BUY them.

Which has NOTHING to do with subscription vs. sales for software. Nothing at all.

Don't take your eye off the ball. Apple will be playing a colossal role in the Netflix-ization of music that has already been accelerating past Apple's dramatically declining sales model. It's a many billions of dollar business, mind you, and it's ridiculous to say it's going away -- but Apple is no longer in first place, and is fading fast, for the simple reason that it has the wrong business model for how people ARE -- not theoretically, but ARE -- choosing to enjoy music.

Which is the same way they have increasingly been enjoying movies and TV shows.

Which, again, has nothing to do with software.


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Mitch Ives
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 24, 2014 at 7:16:09 pm

Tim,

I think we agreed on all those points. My point was what works in media hasn't worked well in software. I also hope Apple leaves the subscription to media and not software.

As far as you commenting on subscription software, I think we all understand that you can't comment...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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Tim Wilson
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 24, 2014 at 8:45:14 pm

[Mitch Ives] "I think we all understand that you can't comment..."

Ah, but I can, and I have. :-) I greatly appreciate the leeway you folks give me to comment personally as separate from my professional capacity.


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Mitch Ives
Re: Apple to kill the subscription aspects of their Beats acquisition?
on Sep 24, 2014 at 9:49:08 pm

[Tim Wilson] "I greatly appreciate the leeway you folks give me to comment personally as separate from my professional capacity."

Speaking for myself, I encourage it...

Mitch Ives
Insight Productions Corp.

"Criticism may not be agreeable, but it is necessary. It fulfills the same function as pain in the human body. It calls attention to an unhealthy state of things." - Winston Churchill


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