Apple's annual developer conference in San Francisco.
Beats Music's Subscriber Base Pegged at Just 111,000
An acquisition by Apple would undoubtedly boost exposure for the Beats Music service, and potential tie-ins with Apple's existing iTunes services would offer a strong platform for growth, meaning that Apple is likely relatively unconcerned with the small subscriber base.
The leaked royalty sheet breaks down the subscriber numbers according to the available plans, and of the roughly 111,000 accounts, just under 50,000 were individual accounts while 61,621 were joint "family" accounts available through a promotional arrangement with AT&T. Beats Music has not released subscriber numbers, but this leaked sheet appears to corroborate an earlier report from Billboard that claims Beats' early subscriber estimates have been "disappointing" to music label executives.
Apple had reportedly been impressed with the subscription conversion rate for Beats, although it is not entirely clear from the chart where those users are accounted for. Roughly 70% of total plays fall under a "promotional royalty rate" category, with the remaining being subject to standard royalty calculations, although it is unclear what criteria cause a play to be placed in either of the two categories.
Looking at the individual subscriptions, the numbers show that Beats pays out approximately 65% of its revenue to rightsholders, similar to other streaming services, with labels receiving by far the largest chunk and songwriters receiving only a tiny slice through their performance rights organizations (PROs).
Apple is reportedly acquiring Beats Electronics for music industry veteran Jimmy Iovine and musician Dr. Dre, both of whom may play a crucial role in Apple's future music strategy. The Cupertino company also will receive a high-margin headphone business that could be help Apple attract a wealthier and younger clientele.