In July, Beats Electronics acquired MOG, the well-reviewed subscription music service that struggled to build a user base. It was arguably a steal at $14 million, but the acquisition nonetheless had critics wondering how the electronics company, known for its Beats By Dre headphones, could compete against established services such as Spotify and Rhapsody.
Today, the company revealed its answer—or at least tried to explain why it believed Beats had a fighting chance in the space. "Project Daisy," as the service is dubbed, will be a subscription music streaming service headed up by TopSpin Media founder Ian Rogers, with Trent Reznor serving as chief creative officer. On a conference call Thursday, Beats executives described Daisy as a "complete thought," with Beats cofounder Jimmy Iovine saying the company would leverage its hardware, brand, distribution partnerships, and artist relations to differentiate Daisy from the competition. But perhaps more significant than making Daisy popular was the notion of making subscription music mainstream. "I don't believe any of the services out there are going to popularize subscription music like Beats can," Rogers said. "These are the guys who can bring it to the masses."
Daisy, likely under a different name, could launch in the second half of 2013. The company did not provide much more detail on the service other than saying prices would be "competitive." It's unclear at this point what content or features would differentiate the service from Spotify or Rhapsody, or what exact role Trent Reznor would play at the company. And when asked how the company could leverage its own hardware to push subscriptions, executives spoke only in generalities. "We have a very trusted name in music with Beats," Iovine said. "It's really a badge of trust."
Instead of diving into specifics, the Beats team spent most of the press call ticking off the reasons why an opportunity still existed in subscription music—while taking time, of course, to throw an implicit jab or two at the company's new competitors. Spotify, the leader in the space, has more than 5 million subscription customers and 20 million active users, but as Beats executives said, none of the services have made subscription music "mainstream." (Iovine was even asked at one point to define mainstream. His answer: "That means a lot of people!") The problem, they said, was that none of the services in the space created an "emotional" connection to their customers.
"They are all utilities that say, 'Give me your credit card; here's 12 million songs; good luck,'" Iovine said. "We don't think that's going to stick."
Rogers said Daisy's experience would allow the company to differentiate, though he would only hint at what that experience might look like. "When fans open Daisy, they're not going to just get a search box staring at them," Rogers said. "They're going to get an awesome music experience. The next phase is all about curation by trusted sources."
But beyond the service's experience, it's likely Beats' biggest leg up won't be its content or prices (so far, we just haven't seen significant differentiation on this front) but its partnerships. The company has built strong partnerships with companies from HTC to HP, as well as strong artist relations with stars such as (cofounder) Dr. Dre, Lady Gaga, and Justin Bieber.
As Iovine said, "We will use everything Beats Electronics has to push Daisy."
[Image: Flickr user Brandon Shigeta]