Will Beats Music Challenge Pandora or Sirius XM?

Beats Music is here, and that means that Pandora and Sirius XM Radio need to pay attention.

Jan 21, 2014 at 2:45PM

Beats Music is officially available today, and the new streaming-music service is certainly ambitious. Backed by musical celebrities Dr. Dre, producer Jimmy Iovine, and Nine Inch Nails' Trent Reznor, Beats Music is hoping to set itself apart by having a higher level of curation.

Unlike the algorithmic prowess of Pandora (NYSE:P), Beats Music relies on pros to pump out desired playlists. In that sense, it may seem more like Sirius XM Radio's (NASDAQ:SIRI) satellite-radio platform, where celebrities or pro-radio programmers line up tunes. But Beats Music offers far more variety than the dozens of channels available via traditional radio.

The early buzz is encouraging.

"I've been testing Beats Music for about a week on an iPhone, and I really like it," Re/code's Walt Mossberg writes this morning. "I found that its human curation -- from Beats' own editors and a wide variety of outside curators, like music magazines such as Mojo, DownBeat, Pitchfork and Rolling Stone -- offered much more satisfying playlists than other services I've tried."

Mossberg does go on to conclude that music is subjective, but still recommends the service that sets music fans back $10 a month. That's in line with what Spotify charges for its premium platform -- and any price may be too much for the average Pandora or iTunes Radio listener who will put up with ads before paying for a platform. But Beats Music also has an interesting deal with AT&T (NYSE:T) whereby as many as five logins across 10 different devices costs just $15 a month for AT&T Wireless customers. That's a price point that's in line with Sirius XM's new monthly rate, and that's not too shabby if it's divvied up among a group of users.

Some will argue that Pandora and Sirius XM don't need to worry. Pandora attracted a record number of unique listeners last month, and Sirius XM closed out the year with a record number of self-pay subscribers. If they survived the arrival of iTunes Radio in September and other tech giants entering the market several months earlier, what's one more diver into this crowded pool? That may be true, but Beats Music isn't just reinventing the wheel here. It offers several unique modules and a well-reviewed interface including The Sentence, where users can simply play Mad Libs to fill out scenarios such as "I'm at the beach and feel like pre-partying with my friends to dance-pop" or "I'm at a party and feel like BBQing with my BFF" that deliver playlists that go beyond tweaking genre or artist categories available elsewhere. 

Then again, when you're this ambitious you can also crash just as hard. Beats Music won't survive as a niche service. It has too many name-dropping connections to settle for less. It will either be a hit out of the gate or be shuttered within a year or two if it's not one of the leading platforms. Keep an eye -- and an ear -- on it, investors.

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Longtime Fool contributor Rick Munarriz has no position in any stocks mentioned. The Motley Fool recommends Pandora Media. The Motley Fool owns shares of Sirius XM Radio. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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