Apple's bet on streaming music new trend

Buy Beats

More than a decade ago, the late apple CEO Steve Jobs (Steve Jobs) for the first time to cast his "reality distortion field", threatening the record industry executives agree that the company's sales at the unit price of $0.99 through iTunes singles.

Now, the situation changed. In the latest in a wave of streaming music, apple became instead was enveloped in the object.

, according to people familiar with the iPod and iPhone maker is expected to be announced this week the earliest Beats with streaming music service providers and headset manufacturers Electronics $3.2 billion takeover agreement, the latter by American famous music producer Jimmy ai Owen (Jimmy Iovine) and rapper, Dr. Dre.

The deal comes as Pandora and services like streaming music revolution, though apple eight months ago also launched iTunes Radio services, but did not succeed.

"Apple is two years behind services." Investment firm Venrock Capital partners, apple co-founder David parkman music business (David Pakman) said, "they need streaming media product."

Compression of the apple

, according to people familiar with the decline of digital music downloads, record companies have put pressure on the company, hope and common development of streaming music business. Record companies hope that Beats apple will forge a services like Music and other media streaming Music service competition.

"Record companies hope that apple develop a high-quality service." A person familiar with the matter said. "they make money by streaming media."

In recent months, according to people familiar with the major record labels to iTunes Radio discontent is growing. Streaming media subscription service, has now become the whole music industry's fastest growing revenue stream, but it did not contribute to the apple.

In 2013, according to the international federation of the phonographic industry of streaming media subscription service revenue grew 51%, to $1.1 billion, and the music industry's overall revenues of about $15 billion. At the same time, download digital music revenues fell 2.1%.

The average user spent on streaming media service fee is higher than the music download service. According to people familiar with the matter, each user spends on music to buy a spending about $25 to 35, but the monthly subscription fee is $9 - more than $100 a year.

, according to people familiar with the every play a streaming song, record companies can extract 1 cents into, combined average revenue per user is higher than pure digital downloads

Apple, Beats, warner music and SONY records (16.18, 0.13, 0.81%) declined to comment. Universal music didn't respond.

Detente between

After buying Beats, apple will get a promising streaming media service, a well-connected music executive team, a high profit margins of hardware. But such a high price deviated from the acquisition strategy of apple in the past 20 years, the company after the acquisition of scale majority only hundreds of millions of dollars.

Some Wall Street analysts believe that apple to buy Beats is an uncertainty. Although streaming media industry is growing rapidly, but in the music market share is still low. If the record labels don't agree to reduce the licensing fees, the apple would like Pandora or company, difficult to profit from the streaming media business. Beats the size of the still lags behind that of Pandora and services, there are about 99 million active users.

But, according to people familiar with the record company's support for apple, that long hostile relations between the two sides have tempered. Download iTunes was launched in 2001, the single mode to record company income fell, because users no longer need to purchase a whole album.

Now, the future of the music industry recognized streaming music, but the business growth is smooth enough. Industry, according to people familiar with the authorization negotiations with companies such as services and Pandora to be performed every 12 to 15 months, and very difficult.

It is not clear after apple bought Beats may ask for what kind of conditions. Apple's iTunes has 800 million users, so have a lot of bargaining chip.

Is of great significance

"ITunes is a leader in the field of digital music downloads." Brokerage company Roc Nation manager Daniel Weisman, Daniel Weisman said, "if iTunes can make music download streaming subscribers, it will benefit all people."

, according to people familiar with the music labels like Beats, because it is born within the music industry. As Mr Owen involved, the apple will also have a great negotiation advantage. He may have left Interscope records company, and to join the apple.

Apple rarely ACTS as a market pioneer, they usually focus on early enterprise, and then select the optimal timing of entering. People familiar with the matter, since the Beats Music since January this year, apple has been focusing on the service. When the service launched a few weeks to 1000 new users a day later, apple was most impressed by the performance of the company.