Will Beats Music Challenge Pandora or Sirius XM?

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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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Read/Post Comments (7) | Recommend This Article (1)

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  • Report this Comment On January 21, 2014, at 3:25 PM, Austin77478 wrote:

    When is this fear mongering going to stop? The threat of Sirius' demise has been written about by so many writers for at least 10 years now. It is not a secret anymore, if you want your article to get a lot of attention, write about Sirius.

  • Report this Comment On January 21, 2014, at 4:04 PM, 67vair wrote:

    Just another jukebox. It will die a quick death.

  • Report this Comment On January 21, 2014, at 4:12 PM, Guggerpaul wrote:

    I didn't even read the article because I've come to believe MF is just a gun for hire by the billionaires boys club. Your recent article telling readers Sirious is loosing share of the dash and is on its way out. the next article promoting Liberty and saying how great their getting Siriousxm is as an investment, is both telling and obvious that you are not on the side of the small investor but in fact are willing to sell us out. You should change your name to "The Motely Tool"

  • Report this Comment On January 21, 2014, at 6:34 PM, dannysboy wrote:

    How many more music services will emerge? Don't be surprised to see Encyclopedia Musicianna. It makes as much sense as anything else.

    The only thing that makes sense as an investment model is SirusXM

  • Report this Comment On January 21, 2014, at 10:37 PM, ddeleo wrote:

    I was observing a friends 20+ son and he was oabsorbed in creating a playlist. I think the beats idea is interesting where you suggest a setting and a playlist is generated. But I think most of the fun many people have is creating their own playlists, as part of their personality regardless of the setting. So I think Beats idea, as creative as it is, will be no more than a novelty.

  • Report this Comment On January 21, 2014, at 11:28 PM, SchrafferJacobs wrote:

    This stock will be the greatest bear story to ever exist....

    Aren't they aware that Google is going to open source their whole digital music library to the public?

    Since providing competitive access for anyone to make money through advertising and bring creative value to the utilization of the underlying resource (music), this enables a teenager in a basement to replicate Pandora overnight....

    And big deal they are in cars, the trend is that all cars will have access to App stores.

    Audi signed a deal with Google for Android operating systems in their cars.

    These are not exclusive contracts Pandora acquired.

    The multitudes of streaming services will leave Pandora with a small and measly piece of the pie.

    Anyway greater fool theory at its finest...

    Until the music stops.


  • Report this Comment On January 22, 2014, at 3:58 PM, gvInvestments wrote:

    Tell maloney I'm not selling my shares and if he wants them he will have to Fight me for them and that I'm going to go and join one of the Lawsuits. Give me my $5.00 Dollars or go to hell maloney.

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Rick Munarriz

Rick has been writing for Motley Fool since 1995 where he's a Consumer and Tech Stocks Specialist. Yes, that's a long time. He's been an analyst for Motley Fool Rule Breakers and a portfolio lead analyst for Motley Fool Supernova since each newsletter service's inception. He earned his BBA and MBA from the University of Miami, and he now lives a block from his alma mater.

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