Apple May Shut Down Beats Music Brand, but Stay in Streaming Music Market

Apple said on Monday that it may shutter the Beats Music brand when it comes to streaming music, but that it plans to say in the streaming music space. The comment was given to Re/code in the wake of a TechCrunch report claiming Apple was planning to shut down the entire service.

TechCrunch reported that five sources said Apple was planning to shut down Beats Music, and that the company had reassigned some Beats Music employees to other projects within the company. Not so, Apple told Re/code, only to specify in a follow up statement that that "Beats brand may go away," but that it is committed to streaming music.

Re/code's Peter Kafka said his own sources indicated that Apple is likely to transition what Beats Music does to its very successful iTunes brand. Note, for instance, that Beats Music CEO Ian Rogers was moved over to iTunes Radio.

Apple bought Beats Electronics in May of this year for US$3 billion dollars—that price included all of Beats' businesses, including Beats Music. The move was heralded in part as an acquihire for cofounders Jimmy Iovine and Dr. Dre, as well as Beat's lucrative headphone business.

Beats Music was a very small part of that $3 billion valuation, and the service was a relative newcomer to the streaming music market, having launched in January of this year. The service's claim to fame is human-created content, and it remains unclear if Apple intends to keep that approach and/or Beats Music's people and technology.

Since Apple's acquisition, Beats Music has updated its subscription service with lower pricing, released updates to its iOS and Android apps, launched its own channel on Apple TV, and rolled out integration with Shazam. According to TechCrunch, only 250,000 people have subscribed to the service since the May acquisition, despite Apple's dedicated fan base and more than five million people signing up for a free trial.

Another report from TechCrunch back in May said that Apple was also looking for a way of transforming its download business at the iTunes Store to a future that includes music streaming, but to do so in a way that didn't destroy the music industry in the process. According to that story, Beats Music and its approach to music streaming was a big part of Apple's strategy.

Which opens the question, what is Apple planning to do in music? It makes more sense that Apple would want to keep the iTunes umbrella than maintain Beats Music as a separate brand. Having done just that so far—maintaining Beats Music and Beats Electronics as separate brands—is an aberration in what has otherwise been Apple's model of absorbing the companies it acquires.