When Apple bought Beats Electronics in August, it paid $3 billion for the company – the largest acquisition in Apple’s history. Why was it so eager to acquire a trendy headphone maker and online music service?
The Financial Times reports that Apple is planning to embed the Beats subscription music service right into iOS next year, potentially baking it right into iTunes. That would put Spotify, the leading streaming music service, on its toes.
The Financial Times suggests that Apple could use the TouchID fingerprint reader included on the latest iPhones and iPads to make it easier for customers to subscribe to the new service. Lots of people already use TouchID for app purchases and to make payments in some stores, and it would be easy for customers to subscribe to a streaming-music service with just a touch.
If this report is true, it would represent a big shift in Apple’s attitude toward streaming services: Steve Jobs famously told Reuters in a 2007 interview that “people want to own their music.” But music sales in the iTunes store are down a little bit as customers migrate toward streaming services, and Apple may be reconsidering its approach. (That said, Taylor Swift and other artists are currently resisting the streaming model, so it’s safe to say the music industry is finding itself at a crossroads this year.)
It’s worth mentioning that Beats Music, the company’s stand-alone streaming service, currently has only 250,000 paying subscribers -- compare that with Spotify’s 10 million paying subscribers (to say nothing of the legions more who use the free, ad-supported version of Spotify). If Apple is indeed angling to enter the streaming music market, it may have an uphill battle ahead. That said, iTunes currently has hundreds of millions of active customers, and if Beats is embedded right into iOS, it will be immediately available on millions and millions of iPhones and iPads, instantly boosting its visibility. iTunes currently includes the free iTunes Radio streaming service, which is geared toward music discovery, but the inclusion of Beats would be the first time Apple has entered the subscription-based music streaming market.
The Financial Times doesn’t name a source for this report, attributing it to “people familiar with the situation” -- so the idea of a Beats/iOS merger should be taken with a grain of salt.
Still, an Apple-branded streaming music service could be an important new source of revenue for the company. There may be millions of paying Spotify subscribers out there, but there are millions more who don’t subscribe to any streaming service at all, and many of those users would be thrilled to have access to virtually all music ever recorded, right there in iTunes, for a monthly fee.