By Alexandra Burlacu | Jul 09, 2013 06:05 AM EDT
Beats Audio is reportedly looking to secure a partnership with AT&T to launch a music streaming service this fall.
Beats Electronics co-founder and CEO Jimmy Iovine wants to launch a new subscription music service in the coming months and it wants AT&T's marketing weight behind the project.
Iovine has been negotiating with AT&T and top executives from the major music labels in recent weeks, CNET reported, citing "people familiar with the talks." According to those sources, the goal is to bundle Beats' upcoming music streaming service with AT&T data plans in order to reach a big audience quickly. The service will be called "Daisy."
Beats and AT&T are reportedly in the early stages of negotiations, which means the talks could either result in a partnership, see Beats seal the deal with a different carrier, or fall apart altogether.
If it goes through, this collaboration would likely entice consumers with an initial period of free music access. Once those users are hooked, the goal would be to convert them to paying subscribers. For now, the companies are reportedly negotiating how much free music to offer and who would cover the costs.
Getting AT&T behind the Daisy project could give Beats a major boost and enable it to better compete in the digital music business. Daisy would not only go up against Spotify and smaller services such as Rdio and Deezer, but it would also have to face bigger rivals that are just getting into the subscription music game. Google, for instance, launched its "All Access" service back in May, and the company is also planning to launch a new service tied to YouTube later this summer, sources told CNET.
Iovine founded Beats with popular music artist and producer Dr. Dre, betting on heavy names since the very beginning. In a first effort to into the music streaming business, last year Beats bought on-demand subscription service MOG. Despite being well-received and getting positive reviews, MOG failed to gain much traction. Iovine wants to combine that promising MOG technology with the Beats brand to launch Daisy.
Daisy's Edge: Highly Customized Playlists
While other companies already offer music streaming services, Iovine's offering would come up with something new to differentiate itself. Daisy will rely on a mix of humans and algorithms and Iovine hired various artists, DJs and others with solid knowledge and experience in music producing. In other words, instead of relying just on algorithms to come up with playlists, Iovine's service will include human recommendations from heavyweights in the music business. No other high-profile music service relies so heavily on people to select the music, and this may help Beats hit the jackpot.
Daisy will also have Nine Inch Nails frontman Trent Reznor as its Chief Creative Officer and aims to offer the best and most accurately customized playlists.
"Most tech companies never get curation right," Iovine noted at the AllThingsD Dive Into Media conference back in February. "It's not in their culture. We will be miles ahead of them. If you are going to the gym five days a week, we will know that, and when you wake up we will have a list for you."
While relying heavily on people to produce playlists may give Beats a massive edge, mobile is currently at the center of all music offerings. Teaming up with a heavyweight carrier such as AT&T would substantially boost the service's potential.
AT&T, meanwhile, might see this partnership as a chance to boost phone sales and premium data plans. Beats by Dr. Dre already boasts a well-established brand and has a notable footprint in retail stores and social media. On Facebook, for instance, Beats by Dr. Dre has 5.8 million "Likes," while AT&T has 4.6 million. If it materializes, this partnership would bring benefits to both parties.
Considering that copyright holders, i.e. the music labels and publishers, get 70 percent of every dollar they bring to a music service, that service would need a huge audience in order to be successful and economically viable.
Iovine already is well-known for producing major artists such as Bruce Springsteen and U2 and enjoys big support from the music industry. Back in March, he got billionaire mogul Len Blavatnik to lead a $60 million investment round in Daisy. Blavatnik made the investments through his firm Access Industries, which became Warner Music Group's owner in 2011. Moreover, Iovine is also the chairman of Interscope Geffen A&M Records, a unit of Universal Music Group.
Such notable relationships may not be a sure recipe for success, but a partnership with AT&T or another major carrier could significantly boost chances for success.
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