Beats Music Signs 1,000 Subscribers a Day in Month (Before Free Trials)

Taking on Spotify in Brutal Competition for the New Music Business

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Beats Music, the subscription streaming service started by Jimmy Iovine and Dr. Dre, signed up about 1,000 paying subscribers a day in its first month, people with knowledge of the situation said.

Beats Music is challenging industry-leader Spotify with playlists created by music experts. So far, most songs played on Beats Music are from curated lists and a feature that generates selections after a listener completes a sentence, two of the people said.

The company enrolled about 28,000 customers to the $9.99-a-month music service -- before free trials with AT&T began contributing subscribers, said the people, who requested anonymity because the information is private. Beats Music provided the figures to investors in February, they said.

The AT&T tie-in created a pipeline of 750,000 potential subscribers who signed up for 30-day and 90-day free trials starting Jan. 31, the people said. As those trials end, more than 70% are converting to paid subscribers, they said. For Beats Music to eventually become profitable, the company will need at least 5 million paying customers, based on an estimate from Recon Analytics in Boston.

"My first goal is 500,000 people and we'll kill ourselves to get there," Mr. Iovine said in January.

Sarah Joyce, a spokeswoman for Santa Monica, Calif.-based Beats Music, declined to comment on subscriber and trial figures, as did Steven Schwadron, a spokesman for AT&T at Fleishman Hillard.

Beats Music's strategy is to promote the service, which began on Jan. 21, through partnerships. Target provided 30-day trials to some electronics and entertainment shoppers, while talk-show host Ellen DeGeneres touted Beats on air.

In addition to individual plans, AT&T exclusively offers a Beats Music family plan that provides access to as many as five people on each account for $14.99 a month after the 90-day trial. Those trials start ending in May.

Once the free period ends, customers are billed for the service. AT&T, which is promoting Beats Music in its TV commercials, is signing up music-streaming customers online and at its retail stores.

~ Bloomberg News ~

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