>> “Could Eddy’s team have built a subscription service? Of course,” he said. “We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.”
From my usage of the Beats streaming service it stands head and shoulders above everyone else because of the people it has creating playlists. They are really fantastic especially when compared with Spotify. Apple could build a streaming music service but they need the right people to build a good one.
Interestingly, I find the exact opposite-- Beats is inferior to Spotify (or other competition such as Rdio) in my opinion.
This isn't necessarily because of the curated playlists, but it's the service as a whole. Beats is quite rudimentary in terms of music management, and requires way too many taps to add multiple songs to playlists or even just shuffle play a playlist. When I'm trying to listen to music I know I like, Beats falls behind. The curated playlists are kind of a distraction with my usage, and I personally wish they'd focus less on the celebrity playlists and more on letting me listen to music I like.
Of course, as you demonstrated, Beats is a hit or miss because of its focus on discovery/curation over music playback. It all depends on the user and how her or she prefers to listen to music.
Disclaimer: I do still subscribe to Beats, but only because of the AT&T deal that makes it cheap for 5 users.
> Beats is inferior to Spotify (or other competition such as Rdio) in my opinion.
> Beats is quite rudimentary in terms of music management, and requires way too many taps to add multiple songs to playlists or even just shuffle play a playlist.
By comparison, I am a Spotify subscriber, and Spotify until recently didn't even have a way to 'save' albums wholesale (which is my preferred way of listening to music). Instead, you had to save each album as its own unique playlist, which got old fast. Now they have introduced a way of 'saving' albums and browsing through them by artist/album/song, but this new feature still hasn't propagated to all their clients (e.g. their Roku client). So it's not like Spotify is that much better.
Obviously people have their preferences but there is a point you made that puzzle me:
>> "too many taps to[...]just shuffle play a playlist."
I don't have my phone on my but isn't there just a shuffle button on the play screen and I thought another one at the top of a playlist?
Personally I have an account with Beats and Spotify. I keep my Spotify one for desktop usage. I don't like using any streaming service through the browser but Beats really sucks atm. I have problems with songs not playing again after I've paused.
To shuffle a playlist, you actually have to hit the play button for the playlist so it begins playing in order. Then, you enable the shuffle feature in the now playing screen, and then you can skip past the first track to a random one.
I just checked and don't see any specific shuffle buttons, but if there's one I'm not seeing then that'd make me happier.
It's not a huge deal, but it's still one of those things I shouldn't have to do manually in this day and age-- shuffle is a rather standard feature.
Just checked and you're right. It's something I use on Spotify all the time but I guess I've never noticed on Beats - mainly because I'm listening to new curated playlists mostly so shuffle isn't a big deal there.
Even though Cook said it's not about building it, "it's the people. It's the service", is $3 billion worth what is essentially an acquihire?
EDIT: Right, it's still a profitable business regardless and I should have touched on that. But I don't want to see big tech companies acquire just for profit. They become behemoths that die slow deaths. I want to see Apple continue to reinvent based on their vision. I don't want them buying safe businesses. It's the reality of the world, I guess. I just firmly believe that Apple could have created their own spin on this market for less than $3 billion and beat out Beats.
The reason for the purchase might be the people, but it doesn't mean the people are the only thing determining its value. They had > $1b in revenue last year, and that can't just be ignored when determining a fair value for the company.
I don’t think anyone is arguing Apple bought them for the revenue. Apple is making enough money, they really don’t need this tiny revenue stream.
However, if they really only want part of Beats, they still have to buy the whole company, revenue and all. They have to pay for it.
This is less of a problem than it seems, though. One plausible scenario is that Apple just keeps the hardware part of Beats separate and making money, while getting all the rest of the people working for Beats on board.
This is a large acquisition, but it’s not super huge and mostly so big because Beats successfully makes and sells hardware. If they keep that part separate and independent of Apple in the future this might actually turn out to be a tiny acquisition, more in line with Apple’s past music acquisitions. Think Lala: http://en.wikipedia.org/wiki/Lala_(website)
Beats has a well known brand, and their headphones business is doing pretty well for itself. It's in a whole different league from the usual "buy a startup with a tiny market share and shut down their operations to repurpose the engineers six months later" acquihire.
True but if they're the best people that might be the only way to get them. The company makes a lot of money so you have to take that into account - it's going to continue make a lot of money under Apple. I think enough that they could make that $3bn back in 5 years on headphone sales alone even if the streaming service didn't work out.
Edit:
>> "Right, it's still a profitable business regardless and I should have touched on that. But I don't want to see big tech companies acquire just for profit."
I agree. I don't think Apple was buying for profit. But when you're valuing a company the fact they are really profitable has to factor into the price. I read they made almost $1bn last year selling headphones so $3bn isn't a crazy valuation.
Yes because it's a profitable business and will be accretive right away. The financials provide a baseline for why this deal is good, Iovine/Dre and Beats Music is just a free call option.
setting aside the streaming service and the profitable hardware, bear in mind the context if you evaluate the deal purely as a acquihire. apple has about $160B in cash [1]. $3B for an acquihire is comparable to zynga in 2013 [2] purchasing some startup for $30M.
Acquihires are by definition evaluated on the perceived market value of the team, which is very rarely proportional to the cash reserves of the buyer. The existence of wealthy suitors like AAPL might shift market values (for any prospective buyer) for tech talent upwards, but no matter how much cash they have in the bank, AAPL can certainly acquihire top talent in the $30m range if that talent is showcasing their skills at unprofitable startups rather than highly profitable brands, in much the same way as they have no need to offer employees salaries' two orders of magnitude more than comparable level employees at companies with a mere $1.6M in the bank.
It would have to be seriously impressive talent to be worth $1.6Bn when you compare it with what Apple paid for NeXT...
Is it just the ability to discover new music that has people in love with BS?
I find that Google Play does a fantastic job on my phone, and for any sort of real use I fall back to my Sansa MP3 player. I personally dislike others making my playlists, so perhaps I'm far outside the demographic.
Is there something I'm missing here, some sort of killer feature perhaps, that validates the huge valuation of this acquisition?
For me it's the curated playlists that make it great. IMO opinion they do a fantastic job. I've been getting more and more into Neil Young recently. I just opened Beats and they are showing me a Neil Young album I might like on the main page. I've also started listening to Albert King and they have an 'Intro to Albert King' playlist there too. It's a bit hit and miss but about 75% accurate. When I use Spotify I typically have to think of something I'd like to hear. I find their discovery page awful. When I open Beats I have an album or playlist that I like selected in a few seconds. It seems to be pretty good at learning my tastes and I'm also pretty happy that it's not just recommending similar stuff but a broad enough range of music that I'm expanding my horizons a bit.
>> “Could Eddy’s team have built a subscription service? Of course,” he said. “We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.”
From my usage of the Beats streaming service it stands head and shoulders above everyone else because of the people it has creating playlists. They are really fantastic especially when compared with Spotify. Apple could build a streaming music service but they need the right people to build a good one.