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Editor’s Notebook: Will Apple shutter Beats Music? (And more important questions)

beats audio and apple 300wAt RAIN News we prefer facts to rumors. But rumors can anticipate reality. Whether they do or not, well-sourced rumors are interesting, and point to underlying issues.

This rumor started with a TechCrunch article yesterday, pinned to the site with a confident header: “Apple Plans To Shut Down Beats Music.” The piece cites multiple unnamed sources within Apple. Variety picked up the story, with the same level of confidence in TechCrunch reporting.

Apple quickly denied, as reported by Hollywood Reporter.

TechCrunch swam back into view with an acknowledgment of Apple’s denial, insisting that the “Beats Music” brand name will be discontinued, as Apple decides how to enter the on-demand music space. “Apple’s response really depends on the interpretation of ‘shut down’,” Josh Constine of TechCrunch observed.

That is true, and the observation connects back to May, when Apple acquired Beats Electronics, which includes Beats Music. At the time, many industry observers regarded the deal as an “acquihire” — meaning that Apple valued the executive talent (Jimmy Iovine and Dr. Dre) more highly than the product (Beats Music, which reportedly had only about 250,000 subscribers in March). By that line of speculation, one might expect Apple to ditch the product as a non-starter, and set Iovine and Dre building a new, Apple-branded service from the ground up.

Certainly, it would be historically uncharacteristic for Apple to bolt a non-Apple brand into its unified iWhatever ecosystem. Beats Music was only five months old when it was bought, and while its launch was splashy (including a Super Bowl ad starring Ellen DeGeneres), the brand was not a widely recognized asset that Apple would necessarily want to preserve.

Whether Beats Music perseveres as a trademark is not the main question in the speculation of Apple’s role in a post-iTunes world of music consumption. (iTunes is not being shuttered, but its influence is waning as music sales drop.) The issue, which has probably been on the table at Apple for months, is how the company will enter the crowded interactive music-service market to which it is drastically tardy.

One guiding light for rumor swirl might be Apple’s much smaller, less noisy acquisition of Swell Radio in July. The Swell Radio service was instantly shut off. That action was startling in its abruptness; the ink might not have been dry on the agreement when Swell was unceremoniously unplugged. Swell was a podcast listening service. Apple has its own app for that, famously mediocre and bracingly criticized. Whatever Swell’s asset mix — executive talent, engineering staff, product quality — we can be sure that Apple will use it to shine up its presence in the podcast-app market, probably with an Apple-branded product.

Will Beats Music persist as a brand? Unknown. (Don’t forget the AT&T bundling agreement, which might create a logjam in any re-branding effort.) Will Apple wade into on-demand music, complementing the non-interactive iTunes Radio and the still-productive iTunes Music Store? Definitely. Will Apple retain its clout as the dominant music distribution outlet? It could take 3-5 years to answer that question.

Brad Hill

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