Sep 01, 2015

The Web Radio Landscape: Is Beats 1 Putting the Heat on Pandora and SiriusXM?

Bruce Warren, program director for the University of Pennsylvania's musically ­adventurous public-radio station WXPN, says he's "loving Beats 1," Apple's 5-week-old digital radio station. But, he adds, he doesn't understand the media's fascination with the service's human-curated, DJ-hosted ­format. "There are a lot of cool radio ­stations around the world that are doing that on any given day," he says. "It's like, 'Wake the f-- up, hipsters!'" The idea may be essentially as old as ­commercial radio itself, which began in the 1920s, but as the centerpiece of Apple's latest gambit to evolve as music consumers shift from downloads to ­streaming, Beats 1 puts a fashionable new spin on the medium and, ideally, will serve as a loss leader and gateway drug for Apple's $9.99-a-month subscription streaming service. Born out of the company's $3 billion acquisition of Beats Electronics in 2014 and a successor to Apple's Pandora-like iTunes Radio, Beats 1 revolves around a stable of chatty, enthusiastic DJs led by BBC Radio 1 alumnus and music ­trendsetter Zane Lowe, and supplemented by artists such as Drake, St. Vincent, Elton John, Queens of the Stone Age frontman Josh Homme and even Beats co-founder Dr. Dre. The effect, amplified by social media, is that old-fashioned sensation of many people tuning in at once -- a ­communal experience in a digital realm where personal customization is the norm. Apple certainly isn't the first to ­humanize online radio, just as it wasn't the first to invent the MP3 player, but if the roughly $700 billion company can create as much excitement about Beats 1 as it has over iPhones, it could popularize digital radio in a way that would directly challenge the format's largest entities, Pandora and SiriusXM. (Although the latter is ­commonly tagged as satellite radio, it charges a ­separate fee for its online streaming service, which offers exclusive programming.) "The brilliant thing about Beats 1 is that it manages to project a very non-­mainstream vibe when it is in fact under the umbrella of a very mainstream ­company," says Bridget Herrmann, Midwest radio ­promotion ­manager for Crush Music (Weezer, Fall Out Boy, Sia, Ashley Monroe). "And in spite of Apple being that very mainstream ­company, it has maintained its persona of the hip, cool brand by being ­innovators in its field. Beats 1 gives off the same vibe because, as far as digital radio goes, it stands alone at the moment in what it's doing with music, guest DJs, interviews and overall format." It is already building a reputation as a ­destination for exclusive music premieres and breaking news. In late July, Drake ­premiered three new songs on his OVO Sound show including "Charged Up," a response to friend-turned-rival rapper Meek Mill's accusations that he doesn't write his own rhymes. Then, at the beginning of August, Dr. Dre demonstrated one way that Beats 1 will funnel customers to Apple Music's for-pay site when he announced on his show The Pharmacy that he would be releasing his first album in 15 years, Compton, in conjunction with the new N.W.A biopic Straight Outta Compton. The album is ­available exclusively on Apple Music. Beats 1 enters the market at a time of growth for digital broadcasting. Although terrestrial radio still dwarfs its online equivalent -- according to Nielsen Audio, 93 percent of U.S. adults listened to AM or FM at least once a week in June -- the gap is closing. Between 2000 and 2015, the weekly U.S. reach of online radio has grown from 2 percent of the U.S. population age 12 and older to 44 percent, according to Edison Research and Triton Digital. That number rises to 69 percent among 12- to 24-year-olds. From 2013 to 2014, streaming revenue also jumped from 21 percent to 27 percent of total retail music sales, which was nearly $7 billion in 2014, according to the RIAA. The organization also reports U.S. paid streaming subscriptions more than tripled from 1.8 million in 2011 to 7.7 million in 2014.

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