As widely rumored, Apple is working to revamp the Beats streaming music service into a subscription service that will integrate into the company's music app. Trent Reznor of Nine Inch Nails, who was chief creative officer for Beats, is playing a major role in redesigning the music app. Apple is also said to be working on an enhanced iTunes Radio service that will be tailored to listeners based on their regional markets.
Several music executives have told the NYTimes that Apple tried to convince labels to agree to lower licensing costs which would have translated to a lower subscription fee of $8/month; however, they were not successful.
That $2 markdown may be small, but Apple’s failure to secure it reflects a shift in the company’s relationship with the music industry. While Apple once enjoyed enormous negotiating power as the dominant force in digital music — an area it helped pioneer more than a decade ago with music downloads — it now faces an array of new competitors and finds itself in the position of needing to modernize its offerings to catch up to the streaming revolution.
The growth of subscription services and a fall in downloads has weakened Apple's leverage and the labels are apparently very happy about that. Last year, revenue from downloads was down 8.5% to $2.6 billion, while revenue from streaming reached $1.87 billion.
The new music app is said to feature characteristics from the Beats app, possibly including curated playlists and more visual appeal while conforming to Apple's minimal design aesthetic. It's likely that the Beats name will be dropped from the service.
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