Beats Music may be integrated into new service tied to iTunes brand
Apple may be close to finally getting some real mileage out of its $3 billion purchase of Beats. The tech giant is reportedly planning to launch a rebranded music service that offers many of Beats Music’s features but undercuts competitors in price, according to 9to5Mac.
The new service would be part of the default Music app on mobile devices and iTunes on desktops, according to the report. It would make use of Beats-specific features, such as playlists curated by experts and context-sensitive radio stations. Users would be able to stream tracks as well as download them to add to their iTunes library.
Ultimately, none of that sounds too revolutionary compared to what you can do with Spotify or Rdio, but Apple is also reportedly looking to launch the service at a price of $7.99 per month. That would be $2 cheaper than other similar options on the market, which could help spur sales.
Interestingly, 9to5Mac also claims that the new service would be available on Android devices as well as iOS ones. While iTunes has long been popular on desktops, Apple has kept the service off of non-iOS mobile devices to this point. Launching on Android could offer an opportunity for an expanded audience not only for the new streaming service but also for the legacy iTunes Store.
Though Apple has historically been a dominant force in digital music, it’s hardly a given that a new Apple music service will trounce its competitors. iTunes Radio, launched in 2013, aimed to take on Pandora in the realm of the Internet radio, but Pandora has continued to gain users despite Apple’s offering.
Most people don't want to pay more for higher audio quality
Business mogul Jay-Z has a new acquisition to add to his collection of night clubs, clothing lines and luxury champagnes. The rapper’s company, Project Panther Bidco, is picking up European streaming music service Aspiro for $56 million, according to Reuters.
But while the Oslo-based service has managed to rack up 580,000 paying subscribers in Europe with a Spotify-like service, the company’s bet on high-priced, high-fidelity music streaming isn’t likely to take the world by storm.
Back in October, Aspiro launched Tidal, a new service for the U.S. and U.K. that offers millions of songs in a high-fidelity, lossless FLAC format, with essentially the same audio quality as CDs. Tidal boasts a library similar in scale to Spotify’s, but its tracks are higher in audio quality. That improved quality comes at a price: Tidal costs $19.99 per month, while Spotify’s ad-free version is $9.99 per month.
And if the last 15 years of the music industry’s fortunes tell us anything, it’s that people don’t want to pay more for high-quality audio files.
An entire generation of music lovers have now grown up without being regularly exposed to CD-level audio quality. Whether ripping CDs to create low-fidelity MP3s, downloading compressed audio files off of iTunes or streaming tracks from Spotify, most young music listeners have gotten used to low-bitrate listening. Audio quality on YouTube varies wildly and is often quite poor, but it’s still the most popular way for teenagers to listen to music.
Moreover, convincing people to pay $9.99 per month for music is already a tough sell, let alone $19.99 per month. Only about a fourth of Spotify’s 60 million users pay for the service, and it’s the platform with the largest paid user base by far. The industry may never convince fans to pay $120 per year (or in the case of Tidal, $240 per year) en masse considering that even at the music industry’s peak in 1999, music buyers were only spending $64 per year on songs, according to an analysis by Re/code.
Of course, there is a precedent for a previously price-sensitive market suddenly being flooded with popular premium products. Dr. Dre and Jimmy Iovine convinced millions of consumers that their flimsy iPod earbuds weren’t good enough. They have since created a billion-dollar empire selling expensive Beats headphones that produce higher-quality sound. Like Beats, Tidal will now be helmed by a big-name music star who is also a deft marketer. Perhaps Jay-Z will find a way to make high-fidelity audio cool, too.
But with so many competitors crowding the market and offering, to the layman’s ears, more or less the same product—25 million or so songs that you can stream whenever you want—it’ll be a challenge to lure customers at a higher price. Aspiro and Tidal may find a successful niche among audiophiles, but Jay-Z’s new music service probably won’t unseat the industry’s giants.
Including 15 million paying subscribers.
Spotify is ringing in the new year with a new userbase milestone. The music streaming service announced Monday that it has reached 60 million active users and 15 million paying subscribers who shell out about $10 a month for an ad-free experience.
The new figures imply that Spotify’s growth rate is accelerating. The company announced in May that it had reached 40 million users and 10 million paying subscribers. In November, amidst controversy over Taylor Swift pulling her entire music catalogue from the service, Spotify revealed that it had 50 million subscribers, 12.5 million of whom were paying customers. Now the company has increased its user base by another 10 million over the course of just a few weeks.
Spotify leads the market of on-demand music streaming services by a large margin. Deezer, the second-place service, has 16 million active users and 6 million paying subscribers.
A new reason to ditch your cellphone contract, safer credit cards, and five more bright ideas that can help you save money in the year ahead.
Every year, there are innovators who come up with fresh solutions to nagging problems. Companies roll out new products or services, or improve on old ones. Researchers propose better theories to explain the world. Or stuff that’s been flying under the radar finally captivates a wide audience. For MONEY’s annual Best New Ideas list, our writers searched the world of money for the most compelling products, strategies, and insights of 2014. To make the list, these ideas—which cover the world of investing, retirement, health care, college, and more—have to be more than novel. They have to help you save money, make money, or improve the way you spend it, like these seven tech innovations.
Safer Credit Cards…Finally
Chip-and-PIN credit cards include a special chip that makes them harder for hackers to replicate. Though you’re legally protected from having to pay most charges when a card number is stolen, more-secure plastic can save you a lot of hassle. Card companies had been slow to roll out chip-and-PIN—until millions of credit card numbers were stolen from major retailers such as Target and Home Depot. “The frequency and size of the breaches absolutely are driving more rapid adoption of the technology,” says Paul Kleinschnitz of First Data, a payment technology firm. Here are two more things to know about the new cards:
They don’t eliminate all your risk. Chip-and-PIN makes it harder to create fake plastic but doesn’t stop numbers from being used at online stores. So you should still check your statement regularly for weird charges. Chip-and-PIN is already common in Europe; the new cards work in automated machines there that don’t accept old-fashioned plastic.
Old way: Commit to a contract and pay $200 for a smartphone that really costs $650. Of course, you still pay for the phone as part of your monthly bill.
New way: Wireless companies are making it easier to separate the cost of the phone and the price of service.
You can shop for a new plan with your old phone. Low-cost players and now the big carriers offer no-contract plans, which may be $100 cheaper per month for a family. Check with carriers for phone compatibility; look up network quality in your area at rootmetrics.com.
Or get a new phone. You can buy a phone outright or on installment, and combine that with a no-contract plan. Sometimes, but not always, the total price beats the comparable contract option, so run the numbers. If you do go contract, mark your calendar: After 24 months, switch to no-contract if you don’t care to upgrade.
All-You-Can Read Subscriptions
As with music, books are moving toward an all-you-can read subscription model.
The Services: The service you pick will hinge on the device you prefer to read with. Scribd ($8.99 per month) lets you read an unlimited number of books, and it quintupled its library this year to 500,000, with 30,000 audiobooks. The service now includes many titles from the big publishers Simon & Schuster and HarperCollins. Works on: iOS, Android, Kindle Fire (but not e-ink readers), Nook tablets.
Though Scribd is the better service overall, it doesn’t work on Kindle e-ink readers. If you’re devoted to that device, Amazon has its own options. With an Amazon Prime subscription, you can choose from thousands of titles to read for no extra charge (one per month). Kindle Unlimited ($9.99) is like Scribd, but customers and reviewers say it’s hard to find books from the “Big Five” publishers. Works on: iOS, Android, Kindle Fire, and Kindle readers.
The Gadget: Phone and tablet apps are fine for many readers, but e-ink devices provide a more booklike experience. The new Kindle Voyage has a screen that’s 39% brighter than its predecessor.
Why buy songs that you’re rarely going to listen to in a few months? What if you could listen to just about anything—except for a few famous holdouts, like Taylor Swift and the Beatles—for less than the price of one CD per month? (Remember those?) A smart new pricing plan could make 2015 the year you make the switch from buying music to legally streaming it.
The Service: Spotify lets you listen to any song you want in its vast catalogue. A free version, with ads, works on desktops or allows you to play artists or albums on Shuffle on your phone. Paying up for Spotify Premium ($9.99 a month) gets you no ads and total control on any device. Spotify has rolled out a family plan that lets you add new users for $4.99 each; that way two people in your family can play their own tunes at the same time. Works On: iOs, Android, desktop
The Gadgets to Listen On: Docking stations are easy to use, with no setup or wires required. The $130 iHome iDL48 works with most iPads and iPhones. A portable speaker lets you get your music off your little earbuds and carry it to any room. The reliable Jawbone Mini Jambox ($130) connects to smartphones, tablets, and most computers through Bluetooth. If your existing stereo has an auxiliary input, an easy fix (in you’re not a hi-fi purist) is to run a cable from the headphone or line-out jack on phone, tablet or PC. Cords are $5 to $10 at Monoprice or Amazon.
Dashboard Knobs are Back!
For years cars have become more tech-laden, with systems to let you make phone calls, find local pizza joints, or answer email. Which is nice, unless you prefer to keep your focus on driving. Interiors became a maze of numeric keypads and other control points. Ford says its research shows drivers don’t use or want all that tech. Now it’s retro time. For the 2015 model year Ford Focus, the automaker has eliminated many buttons, and added old-fashioned knobs to systems such as heat and A/C. In the next Fusion, the company is even getting rid of touch screens. — Bill Saporito, Time assistant managing editor, car reviewer at Money.com
Worrying about bank and brokerage hacks is understandable. But money can be replaced—and you have legal protections. What you should worry about is a hacker mining your more vulnerable iCloud photos, Facebook page, or email account and impersonating you. Two-factor verification, a login protocol, makes it vastly harder for hackers to steal your digital life. Here’s what you need to do to set it up:
Select “login approval” or “two-factor verification” under settings at sites you want to protect. The first time you visit that site on a new computer, you will have to enter a code that’s texted to your phone. (You only need to enter this code the first time you log in from a new computer.) In case you lose your phone, you can print out backup codes, which work once. Once you’ve done this, a hacker would need to guess your password and have physical access to your computer in order to steal your data.
It’s not always easy to scare up a cab in an unfamiliar city. (Where are the best streets to try to hail one? Should I find a taxi stand? Call ahead?) But smartphones are making it much easier to get around. The Uber app can summon a for-hire private car in numerous cities in 45 countries (though the service has recently come under fire in a few cities). In some big towns, like New York, it will also hail a traditional taxi. Curb and Flywheel also grab regular cabs—check first if they work in the town you are visiting. Want help navigating subways and metros? Hopstop has stop-by-stop directions and travel times, as do the transit directions on the Google Maps app.
Music streaming service lost $80 million in 2013
Music streaming service Spotify likes to crow about how it hands 70% of the revenue it generates right back to artists in the form of royalty payments. Such a massive expense has led the company to be wildly unprofitable in recent years — but Spotify may be slowly crawling its way out of the red.
A new regulatory filing released in Luxembourg shows Spotify had revenues of 747 million euros (around $1 billion) in 2013, up 74% from 2012, according to The New York Times. The startup posted a loss of $80 million, but that was smaller than its $115 million loss in 2012.
Spotify has long claimed that as it gains more users, it will be able to both pay artists more handsomely and begin earning some profits itself. The company’s financial trends indicate that the plan may actually work, assuming they can keep adding new users at a steady clip.
But Spotify’s biggest threat is growing dissatisfaction in the music industry with the service’s free tier, which allows users to listen to Spotify’s entire song library while hearing a few ads in between tunes. It was this free offering that compelled Taylor Swift to remove her catalogue from the streaming service, while a Sony Music executive recently expressed concern that the free version of Spotify might deter people from signing up for paid subscriptions. The new financial figures show why Swift and others are wary of the ad-supported model: Spotify made just $90 million in revenue from its ad business in 2013, less than 10% of its overall revenue. That’s despite the fact that free users outnumber paid users on Spotify by about four to one.
Spotify maintains that many free users are eventually converted into paying customers, so the free offering serves as a valuable gateway. But it’s likely that industry players are going to become increasingly fixated on the growth in paid subscribers instead. That’s where the money is.
Spotify and the pop star's record label provide new figures to defend themselves in the battle over profits from the streaming-music service
Taylor Swift has been paid less than $500,000 in the past 12 months for domestic streaming of her songs, Scott Borchetta, the CEO of Taylor Swift’s record label, the independent Nashville-based Big Machine, told TIME Wednesday.
His statement is the latest salvo in an increasingly heated disagreement between Swift and Spotify. The disagreement has sent ripples through the music industry, with the country’s most successful musician removing her work from an admired new online music model.
According to Borchetta, the actual amount his label has received in return for domestic streams of Swift’s music—$496,044—is drastically smaller than the amount Spotify has suggested the artist receives. That sum represents only a portion of the amount paid out by the streaming service. Spotify CEO Daniel Ek said Tuesday that the label for an artist of Swift’s popularity could expect to receive $6 million in the next year from the streaming service as the site’s audience grows. Borchetta said his label had made more from streaming Taylor Swift’s videos on the video site Vevo than it has from putting her music on Spotify.
A Spotify spokesperson told TIME that the total payout for Swift’s streaming over the past 12 months globally was $2 million.
“The more we grow, the more we pay artists, and we’re growing like crazy,” said Jonathan Prince, Spotify’s global head of communications and public policy. “Our users, both free and paid, have grown by more than 50 percent in the last year, which means that the run rate for artists of every level of popularity keeps climbing. And Taylor just put out a great record, so her popularity has grown too. We paid Taylor’s label and publisher roughly half a million dollars in the month before she took her catalog down—without even having 1989 on our service—and that was only going to go up.”
On Nov. 3, Swift pulled her entire catalog from the streaming service, which claims over 50 million users, more than 10 million of whom have paid subscriptions. No artist today can match Swift’s popularity: her new album 1989 has sold nearly 1.7 million copies nationwide in its first two weeks on sale, according to Nielsen SoundScan.
Swift and Borchetta both say that removing her music from Spotify is meant to make a larger point.
“The facts show that the music industry was much better off before Spotify hit these shores,” Borchetta said. “Don’t forget this is for the most successful artist in music today. What about the rest of the artists out there struggling to make a career? Over the last year, what Spotify has paid is the equivalent of less than 50,000 albums sold.”
At first, Spotify asked Swift to come back in a blog post. But after Borchetta said on a radio show on Nov. 7 that he had been hearing from other artists and managers who also want to leave Spotify—country star Jason Aldean just pulled his latest album from the service—Ek posted a broader defense of Spotify’s model. He claims Spotify has paid $2 billion to labels and publishers since its founding in 2008, and says the service, through its mix of paid and ad-supported subscriptions, is replacing revenue the music business had lost to piracy.
This isn’t the first time a major recording artist has tussled with Spotify. In October 2013, Radiohead’s Thom Yorke pulled his solo songs off the site to protest the size of its payouts.
–With reporting by Matt Vella
Taylor Swift has spurned Spotify and rejected the streaming business model. But that's a losing bet.
On Monday, Taylor Swift made headlines by pulling her entire catalogue—save one song—from Spotify’s streaming music service. The move shouldn’t have been a big surprise to anyone following Swift’s previous statements on the music industry. In a much-cited Wall Street Journal op-ed from earlier this year, she blasted Spotify and its ilk for devaluing music.
“Piracy, file sharing and streaming have shrunk the numbers of paid album sales drastically, and every artist has handled this blow differently,” wrote Swift. “Music is art, and art is important and rare. Important, rare things are valuable. Valuable things should be paid for. It’s my opinion that music should not be free, and my prediction is that individual artists and their labels will someday decide what an album’s price point is.”
Unfortunately for Swift, her prediction won’t come true. Streaming music services like Spotify are the future of the industry, and resistance is futile.
Rock and a Hard Place
It’s fitting that Taylor Swift’s new album is titled 1989, because that’s the period Swift likely wishes she lived in. Two years before the advent of the World Wide Web, 1989 would have indeed been a time when music labels had complete control of album pricing and distribution. There was no internet piracy then. The iTunes store, the industry’s previous boogeyman-turned-savior, was more than a decade away. Fans could either pay sticker price for new releases or they could sit by their radios, and most did both. In 2014, the equation could not be more different.
Swift is correct that Spotify’s existence is hurting digital downloads and physical sales. MIDiA Research, an analysis and consulting firm focussed on digital music, finds that 23% of streaming customers used to buy multiple albums a month. Now, instead of handing labels—and artists—multiple payments of $10-plus payments every 30-days, they’re spending just $9.99 on a streaming subscription. In this way, Spotify is costing Swift money.
But that’s really only true if we, like Swift, assume the alternative to Spotify are album sales. That’s false. Instead, Spotify customers spurned by the pop goddess can simply go to YouTube, GrooveShark, SoundCloud, or any number of other on-demand streaming alternatives nearly every teenager is intimately familiar with.
The RIAA reports that streaming services grew 28% in the first-half of 2014 alone and now account for 27% of industry revenue. According to Russ Crupnick, an entertainment analyst at NPD Group, 14- to 34-year-olds—Taylor Swift’s prime demographic—listen to 42% of their music using either on-demand services like Spotify and YouTube or through internet radio services like Pandora.
For labels, the choice is not between Spotify and album sales, but rather between Spotify and a host of less-lucrative streaming options. Artists might only make a fraction of a cent off a Spotify play, but they make even less on YouTube views, and nothing when users of SoundCloud or other similar sites upload songs on their own.
“It’s not piracy anymore,” said Crupnick when asked why most artists choose to work with Spotify. “It’s that you can’t create scarcity. That’s really what it comes down to. Eighty percent of Spotify users are already using [internet radio service] Pandora. I realize you can’t play a whole Taylor Swift album on Pandora, [but] most of the people using these services have access to multiple services. Not on Spotify? Go to iTunes Radio. Not on iTunes? Go to YouTube.”
“If you say ‘hey I don’t want to be on streaming because I sort of object to the way it tastes,’ you’re kind of ignoring where the whole audience is,” adds Crupnick.
And while piracy isn’t a threat right now, that’s mostly because streaming has made paying for music—or at least agreeing to watch some advertising—more attractive than fussing with BitTorrent.
“In some ways, artists have gotten a little bit complacent,” says Mark Mulligan, long-time music industry analyst and co-founder of MIDiA. “As recently as five years ago, artists would be very concerned that if they didn’t license the music they would increase piracy. Everyone has gotten very complacent about the impact of piracy because YouTube has gotten so good at competing with it.” Should the music industry turn against these services, Mulligan warns, the scourge of P2P music sharing could return.
Present vs. Future
All of that said, the fact remains that Swift is a superstar and many of the rules that apply to industry as a whole don’t apply to her—at least not yet. 1989 is on track to break sales records, and its success sans-Spotify shows that at least for the present, it may make sense for particularly big acts to wait a while before releasing a new album for streaming. “Ultimately, Taylor Swift’s music going off Spotify is a short term tactical thing,” Mulligan predicts. “It’s all about selling 1989 and also selling back catalogue.” That’s not a long term strategy, but it can work for her in the here and now.
In the meantime, Mulligan suggests there are ways Spotify and Swift can make up. One thing the service could do is make certain albums available only to premium subscribers for a certain window of time. That could mean more subscription revenue, of which labels get a piece, while also selling albums to that subset of free listeners who decide they can’t wait to hear their favorite band’s latest release.
But as time goes on, and streaming makes up a larger and larger share of music revenue, boycotts like Swift’s will be mostly a thing of the past. In five years “we won’t be having as much of a conversation about buying things,” says Crupnick. “Does Spotify maybe prevent some sales to Walmart or iTunes? We’ll still have that conversation but it will be very whispered.”
She operates on a different plane from the rest of the music biz
Taylor Swift’s latest business move matches the retro title of her new album, 1989. The erstwhile country singer has removed her entire music catalogue from Spotify, the world’s largest subscription streaming service. Swift has already been a vocal critic of music streaming, writing in the Wall Street Journal that platforms like Spotify have contributed to the music industry’s ongoing financial decline.
The move may frustrate Swift’s fans, but it will work brilliantly for the singer, at least in the short term. The first-week sales projections for 1989 have climbed steadily, and the album is now expected to have the biggest first-week sales of any album in the U.S. since The Eminem Show in 2002. Keeping her newest LP off of Spotify and other streaming services seems to have driven fans to buy the album outright. But making music available solely on a declining format is a risky strategy that requires a Swift-ian level of clout and influence.
Regardless of 1989’s blockbuster status, music fans are buying fewer albums each year. Total album sales were down more than 7% in 2013, despite a jam-packed year for pop that included releases by Katy Perry, One Direction, Kanye West, Jay-Z, Lady Gaga and a surprise LP from Beyonce that practically broke the Internet. The slide worsened in the comparatively quiet first half of 2014 as album sales dipped another 14%, according to Nielsen SoundScan.
Taylor Swift blames streaming services for this ongoing decline, but that’s a short-term view of the industry’s financial woes. Album sales have been in freefall since 2000, when Napster made stealing music much simpler than buying it. U.S. album shipments declined from about 13 billion that year to about 4 billion in 2010, the year before Spotify arrived on American shores, according to the Recording Industry Association of America. It’s true that Spotify and other streaming services have caused a decline in digital album sales, but there’s no evidence that records bought via the iTunes Store were ever going to make up for revenue lost from the collapse of the CD market.
The simple fact is young people no longer buy albums as casual entertainment. YouTube, of all places, is the most popular way for teenagers to listen to music. Albums are bought by diehard fans who want to support an artist and casual followers who want to participate in a cultural event. Swift deftly played to both audiences in the runup to 1989, hosting a set of secret listening sessions for her biggest fans around the country and crafting a narrative of creative rebirth around the album that created a curiosity about her new, pop-focused sound. 1989 is the musical equivalent of the Super Bowl—even people who don’t actually care that much about the game will tune in just to be part of the conversation.
But only the biggest of stars can even attempt to make an album release a cultural event, and the strategy doesn’t always pay off. Lady Gaga and Kanye West each had 2013 LPs that explored new soundscapes and were promoted with headline-garnering spectacles, but the albums failed to match the sales of their predecessors. Beyonce’s surprise release was a smash hit by modern standards, partially because it wasn’t streamable on Spotify, but it still hasn’t managed to surpass her first or second albums in sales. Selling records in the digital era is hard, and it’s only going to get harder for people not named Taylor Swift.
For most artists, especially those sandwiched between indie obscurity and mega-stardom, there are no greener pastures to retreat to. These musicians have to follow fans where they are, and that’s on streaming services. Total on-demand music streams on platforms like Spotify and YouTube in the U.S. totalled 70 billion in the first half of 2014, a 42% increase over the previous year, according to Nielsen. Removing music from these services en masse would likely result in the return of rampant piracy on peer-to-peer networks, a practice that was cut in half between 2005 and 2012, according to NPD, years in which we saw the rise of streaming.
Still, Swift alone is so important that Spotify can’t simply let her remain off the service. The company has launched a social media campaign trying to rally Swift fans to compel her to return, but it’s a hollow tactic that appeals to sentiment instead of economics. A better strategy would be providing more evidence that Spotify can generate significant revenue for individual artists or adding more premium features to encourage users to adopt the paid version of the service (Swift’s back catalogue is still available on Beats Music, which is pay-only). It’s possible that Swift’s exodus will force Spotify to retool its business model in a way that’s beneficial to all artists.
But musicians that try to directly mimic Swift’s tactics may be in for a rude awakening. Taylor Swift can bail on Spotify for the same reason the Beatles didn’t put their albums on iTunes until 2010: They can both float above industry headwinds, release their music in the format of their choosing and watch fans follow obediently. Few others have the same luxury.
But you may soon be able to skip the ads by paying for a subscription
SoundCloud, the popular free music-sharing platform that’s helped artists like Lorde skyrocket to fame, is introducing advertisements to its service.
The company said Thursday that select content creators will be able to authorize playing ads beside their tracks and collect some of the revenue from those ads. The ads will first roll out in the U.S., but they’re expected to appear for international users soon, SoundCloud announced.
Ads mark a big step for the music streaming service, which has struggled to monetize its vast user base that includes some 175 million listeners a month. Until now, the service has earned revenue by charging some of its most active content providers.
SoundCloud Chief Business Officer Jeff Toig told the New York Times that most of SoundCloud’s ad revenue will go to content providers, including Sony/ATV, BMG, the comedy show Funny or Die, and independent rapper GoldLink, for example. SoundCloud has already signed up Red Bull, Jaguar and Comedy Central to run ads on the platform, according to the Times.
But you may soon be able to skip the ads, if you’re willing to pay. The Times reports that, over time, the service plans to roll out subscription plans for listeners who want to skip the ads, much like you can do on Spotify, another music-streaming service.