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Beats Music Service Muscles Into the Competition

  |  January 30, 2014   |  Comments

Beats Music is a new entry into the growing marketplace of mobile music streaming services -- how does it stack up against the competition?

Monday evening, January 20, the much anticipated Beats Music service launched. Beats by Dre, from the hip-hop artist and impresario Dr. Dre and the chairman of Interscope Geffen A&M Records, Jimmy Iovine, reinvented the headphone category and they are trying their considerable luck at the much more crowded field of streaming music services. This time out they've added to the party the multi-talented Trent Reznor, the singer/songwriter of Nine Inch Nails fame.

It's noteworthy that most of the press about the new service mentions how crowded the field is with existing music services. This glut of services is a reflection of a significant shift in the way people are listening to music. Most kids today have grown up with a streaming service -- it's called YouTube. And while YouTube has done little to seize this opportunity Pandora, Spotify, and others continue to grow market share. A recent Bloomberg survey shows that folks are listening to a multitude of services at the same time, with both Pandora and YouTube as the current frontrunners. 

There are two key issues with folks' listening habits that affect the health and wellbeing of the streaming services: 1) Have folks made a fundamental shift in terms of the source of music they listen to? The answer to that is yes, and increasingly so. The next and more important question is: are people willing to pay? "The buying habits of music lovers are changing," says Doug Morris, chairman of Sony Music Entertainment. "Rather than buying physical records, or even digital downloads, consumers are starting to prefer buying music on demand from streaming services."

In a December survey, eMarketer asked people who stream music if they're paying for the privilege. About 30 percent are already paying and some folks pay for multiple services.

In terms of my own use of streaming services, I started off listening to Pandora for free. What I liked about Pandora, and still like about it, is that there are not a lot of decisions to make. You just aim Pandora in the right direction by picking a station and then off you go. One night I decided I didn't want to hear commercials so I started paying. But I eventually grew tired of hearing the same songs again and again even when I picked new stations. I didn't realize it at the time, but I'd crossed the Rubicon of streaming music -- I'd become a paying customer. Once that hit me I felt free, because the question was no longer whether or not to pay, the question became, what do I want for my money?

Spotify was the logical choice. After being bored by the same music on Pandora, I could now seek out any album and listen to the whole thing. At first it was empowering and exciting. And when I was online, I could see what my friends were listening to as well. But after some time Spotify started to seem like work. There were countless times when I was heading out of the house to take the dog for a walk and had no idea what to listen to. The current Spotify user experience feels very Web-centric. The online experience is feature-rich and allows for browsing and discovery, but the mobile app is much more limited. You have to dig into the app rather than the app digging into what you and your friends are listening to and offering up tasty musical treats.

Enter Beats Music.

Before I get into discussing Beats Music, in the interest of full disclosure I once shared an elevator with Jimmy Iovine (and a rather large security guard). The reason we were riding the same elevator is that I was consulting for Beats by Dre, which is a separate subsidiary to Beats Music.

The first thing you notice about Beats Music is the beautiful design. The navigation is simple and clear, the design templates are artful and rich. Unlike Spotify, this is clearly a mobile-first service -- there's not much of a website yet for Beats. One of the much talked about features is the notion of curated playlists. Beats comes with a host of tastemaker playlists that gives the option to just listen while someone else does the work. But the curation is just one component in the mix of browsing options. Like Spotify you can search for and listen to any album you want. But the Beats mobile app is especially designed to offer myriad ways of browsing, from music offered up based on your history to browsing by a rich array of genres and activities -- if you're having a BBQ or working out on the treadmill, there are playlists for you.

And then there's the Sentence. Beats gives you a way to roll the dice by completing a sentence as in: I'm "working on a weekend" and feel like "getting freaky" with "my family" to "old skool dance." Based on changing those variables, the app will serve you up hours of music to listen to. While I find the concept a bit gimmicky, my son thinks it's the coolest thing, which I suppose is more to the point -- that there's something here for different demographics and there's some fun and spontaneity built in.

While there's a competitive music-streaming market, Beats, with a solid catalogue of music and a strong user experience, is in a good position to give other services a run for the money. The Beats brand is a very strong launching pad and if Beats puts more powerful deals, like the one they struck with AT&T to provide service to the whole family, along with strong celebrity endorsements, this new service will be in a powerful market position. This is mainstream media compared to Spotify. Beats Music is making plans to allow artists use of the music service to connect directly with fans, Trent Reznor says. "I took a long look in the mirror and asked myself whether I was about to do something that would hurt artists. I came to the conclusion that this will be beneficial and in everyone's long-term interests." 

Clearly there's a lot more coming down the road from Beats Music, so the jury is still out, but the streaming business only works for recording artists if people begin to pay for it, as the ad-supported models don't offer musicians a good cut. Pile on the considerable clout and connections of the Beats Music owners to the incentive for many artists of different stripes to use the service as a means to reach their audience and you can imagine a lot of momentum building to push fickle listeners to embrace the service and the concept of paying for music.

As it stands there's a lot missing from Beats. There's very little social presence in the way that Spotify online shows a constant thread of what your friends are listening to. I've come to value that avenue of discovery and would be reluctant to lose it. And there's something I still miss about the Pandora experience -- there are times when I want to find a song or artist and have a playlist spill out of that choice. But what I really would like is to be able to control how varied the mix is. I want some service to give me a dial where I can control how eclectic the music will get. If I want to listen to Johnny Cash I should be able to control if it's a list strictly of his music or if I dial further out how expansive the list of songs will get, from Bob Dylan all the way out to Sid Vicious. Maybe someday! But for now Beats has upped the ante on user experience. If they come on strong with more features and marketing power, they will be a force to be reckoned with.


Jonathan Blaugrund

Jonathan is a veteran of the interactive industry who has worked on both the client and agency side. As Group Account Director Jonathan leads the POSSIBLE Energy practice and oversees the Southern California Edison Account. He also oversees an array of accounts that span the spectrum of interactive services - from complex user experience and technical projects, to performance marketing and media consulting. He has worked on major product design and technology projects for such clients as BMW, Motorola, and Cablevision; for high-impact website redesigns for E!, Logitech, Oprah Winfrey, and Twentieth Century Fox, and digital marketing and media services for Mitsubishi Motors and Southern California Edison.

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