Report: Apple and Beats Working On Spotify Rival

Report: Apple and Beats Working On Spotify Rival

The New York Times reports that Apple is moving forward with a sweeping overhaul of its digital music services, and has tasked Jimmy Iovine and Nine Inch Nails frontman Trent Reznor with coming up with a worthy rival to competitors such as Spotify.

Report: Apple and Beats Working On Spotify Rival
Trent Reznor (left, Jimmy Iovine, Dr. Dre – Original photo: The New York Times

The New York Times:

Almost a year after agreeing to pay $3 billion for Beats, the maker of hip headphones and a streaming music service, Apple is working with Beats engineers and executives to introduce its own subscription streaming service. The company is also planning an enhanced iTunes Radio that may be tailored to listeners in regional markets, and, if Apple gets what it wants, more splashy new albums that will be on iTunes before they are available anywhere else, according to people briefed on the company’s plans.

Reznor, who was the chief creative officer for Beats, is said to be playing a large role in the revamp of Apple’s music app.

Apple isn’t looking to create a budget priced streaming service, as several music executives told the Times that Apple had failed to convince music labels to lower their licensing costs, which would have allowed the company to offer a lower priced service than its competitors do.

Toni Sacconaghi, a financial analyst for Sanford C. Bernstein, said Apple’s failure to talk down the price with the labels is the result of their being late to the music streaming table.

“They’re used to being a shaper rather than a responder,” Mr. Sacconaghi said. “This is one of the few times where Apple is playing catch-up and not necessarily coming from a position of strength.”

While Apple remains a valuable revenue source for the record companies, its late arrival to the streaming music game let other services get a head start which may prove tough for the company to overcome.

Apple’s new music app is a collaborative effort between Trent Reznor and other Apple and Beats employees, including Beats co-founder Jimmy Iovine. The new service may include many of the same features currently found in the Beats Music service, however it will conform to Apple’s minimalistic design aesthetic, one source told the Times. The name Beats Music is likely to fall by the wayside.

According to one Apple employee, the new service is being tested as a part of a new version of iOS, codenamed “Copper.”

Apple’s new service will reportedly have no free tier, and that is said to greatly please record label executives, who have often complained that customers have little incentive to pay for music if they’re allowed to listen for free.

The Times report notes Apple is also likely to overhaul its iTunes Radio streaming service, which has so far cause little stir in the marketplace. Zane Lowe, former BBC Radio DJ who recently announced he would join Apple, is expected to play a role in the revamping of iTunes Radio.