Can Dr Dre Change the Rhythm of the Crowded Mobile Music Market?

POSTED BY Analyst Team
January 2014 saw Beats Electronic – the company behind hipster headphones founded by Dr Dre – enter into the mobile music market, with the launch of Beats Music for Android, iOS and Windows Phone and desktop in the US. However, acquiring users in a market dominated by Pandora, iHeartRadio, iTunes Radio and Spotify is likely to be no mean feat. Currently sitting atop of the music streaming market is Spotify, which has 24 million active users in 55 countries, 6 million of whom pay for the premium ad-free service. It has recently announced a completely free mobile service (albeit limiting users to only listening to songs on shuffle), and has penned exclusive streaming agreements with bands such as the Red Hot Chili Peppers, Metallica and Led Zeppelin. So how exactly can Beats Music differentiate itself from Spotify, or any other music streaming service for that matter? It seems that Beats Music is taking a three-pronged approach, which focuses on its brand, ease of payment and discovering new music. In case you needed reminding, Dr Dre is founder of the Beats brand, whose headphones are hugely popular and recognisable. However, the legendary rapper has roped in some of his pals from the industry to help promote the Beats Music service, most notably Trent Reznor of Nine Inch Nails, who is the Chief Creative Officer. In addition to this, Ellen DeGeneres will demonstrate the service during her talk show, and Beats Music will advertise during the Super Bowl in February. And in a bid to keep musicians on its side, Beats Music is promising to pay the same royalty rate to all content owners alike – both major and indie. However, all this has not impressed Spotify’s CEO Daniel Ek, who said of Beats Music ‘Our way of doing this is not just slapping some celebrity brand on it and hoping it will be good. We are a social service; we are a product company. People have tried to put a brand on it and thought that’s enough and they have failed: Microsoft, Nokia – many big companies’. However, if the brand does impress you and you decide to take out a subscription to Beats Music, you’ll find the billing process straightforward if you’re an AT&T customer; the US carrier is allowing users to pay their subscription fee through their mobile phone bill. In addition to that, you might be swayed by the cost - $15 a month for a discounted family plan, which allows access for five family members and 10 devices. Finally, Beats Music is hoping its differentiated approach to music curation will also draw in users: Whereas services like Spotify tend to be more passive in suggesting new music, Beats Music is far more proactive. The service asks you to indicate your favourite genres and artists, and regularly updates the content on your homepage. It will also create a mix for you with its service The Sentence, which asks the users to fill in blanks in a sentence to help them set the mood. A late entrant to the mobile music market, only time will tell the success of Beats Music. However, with the market for mobile music worth an estimated $1.7bn in 2013, it’s clear Beats Music don’t want us to Forget About Dre.