Apple, Beats Working On Music Streaming Service

(RTTNews) - Apple Inc. (AAPL) is now working with Beats engineers and executives to develop its own subscription streaming music service, the New York Times reported Wednesday, citing people briefed on the company's plans. The streaming music service would enable Apple to compete directly with streaming upstarts like Spotify.

According to the NYT report, Apple is said to have roped in Trent Reznor, the Nine Inch Nails frontman who was the chief creative officer for Beats, to redesign the upcoming streaming music service. Apple has agreed to acquire high-end headphone maker and music-streaming service Beats Electronics for $3.2 billion last year.

The new service is reportedly being tested as part of a new version of Apple's mobile software system, iOS, code named 'Copper' and expected for public release this year.

The new music app is said to be a collaborative effort between Reznor as well as other Apple and Beats employees, including Beats co-founders - hip-hop artist Dr. Dre and music-industry executive Jimmy Iovine.

It is expected to feature a streaming music service with several of the same characteristics as the Beats Music streaming service, the subscription-based online music service launched by Beats prior to its acquisition by Apple.

According to the NYT report, Apple failed in its attempt to convince record labels to lower their licensing costs. The move would have allowed the company to charge $8 per month to subscribe for the streaming service, cheaper than the $10 per month plans from rivals Spotify, Rhapsody and Rdio. Pandora's premium plan costs only $5 a month.

Apple's enhanced focus on streaming music comes at a time when listeners are increasingly shifting from music downloads to streaming. At Apple's iTunes Store, the biggest music retailer in the world, digital download sales are said to have declined recently as people increasingly turn to streaming music services.

According to the NYT report, Apple also plans to overhaul iTunes Radio, the free music-streaming service that it introduced in September 2013 to compete with Pandora.

Apple would thus have two different products with different features in the music streaming market, enabling the company to compete on different fronts.