Apple’s Pursuit of Beats May Foretell a Shift
By BEN SISARIO, nytimes.com

If Apple makes a major marketing push for Beats’s subscription model — or, even better, if Apple integrates Beats into its ecosystem of online services and physical products — it could mean a big lift for streaming.

Apple entering the streaming music market (virtually overnight) with the clout and installed user base of iTunes would be massive, and it’s probably not an exaggeration to say Spotify’s days as currently structured would be numbered. Looks like we’re in for the next phase of music industry economics.

Since the rumor surfaced a couple of days ago, people have tried to rationalize why Apple would buy the headphone and services company. Some good theories and analyses of both brands have resulted; I think it’s fantastic to have lots of smart people simultaneously indulge in a thought exercise, the answers to which we will probably have in the near future.

My resistance to the idea has largely been because I’ve heard several pairs of Beats headphones myself, and haven’t been impressed. It’s not about being overpriced, but being bad experiences, functionally. A pair of BeoPlay H6 headphones at S$700 is subject to many of the same criticisms one might use against Beats: they’re too expensive, they’re made in China, the margins are criminally high, you’re paying for the brand, and so on — except the H6s really do deliver on the music experience. I suppose many Beats owners will say the same, but there are an awful lot of people with taste who disagree. Apple’s brand, to me, has always been on the opposite end of that spectrum. Perhaps this is an effort to change who we currently think of as their customers.

The Beats Music service, on the other hand, has been really impressive in my short time testing it out. There’s a feature called “The Sentence”, where you fill in a statement that defines the mood and situation you’re in, and Beats Music provides the appropriate soundtrack. I wish Spotify had something like it. I said in a tweet the other day that $3.2bn was the complacency tax of being asleep at the wheel of the world’s largest digital music store, and @craigmod noted that it was a rather low price to pay, in that case. Quite true.

The iTunes reluctance to play the streaming library game appears to be a legacy of Steve Jobs’s (and the senior executive team’s) approach to music as a tangible possession. He used to rationalize the download model by explaining how people prefer to own their music, and have collections, possibly informed by his own experiences with vinyls and CDs and so on. While it may have been true in the early days of the iTunes Store, I’ve observed even in my own listening habits as an older person that it’s no longer true. Collections matter, but song access is becoming ubiquitous and hence irrelevant. In a world where everyone pays $10/mo for music, we can build all the collections we want, without having to think about first buying a digital copy or worry about losing access. Why should you? It’s $10/mo for the rest of your life and everybody stays afloat and happy. Sold.

I wouldn’t be surprised if Beats Music became the backbone of a new iTunes Unlimited offering, and the headphones remained a standalone brand, sold prominently (as ever) in Apple retail locations.

[I first wrote this entry on my experimental blog about technological change, entitled T-Axis. I’ll be cross-posting stuff here for awhile.]