Beats Music started selling subscriptions online earlier this year. The company has been offering an app for the iPhone for a while to allow fans to listen to the service on their mobile device. One thing that Beats Music didn’t allow on that app was the buying of a subscription. The reason for this was that Apple keeps 30% of all subscription fees and sales made from the App Store.
Many companies aren’t keen on letting Apple keep that much money. That has now changed with Beats Music updating its iOS app recently to allow the user to subscribe and use the iTunes billing system to pay for a subscription. Despite having to cough up a lot of money to Apple, Beats CEO Ian Rogers says that the decision to offer subscriptions via the app was easy.
He says that over half the subscribers to Beats Music use iPhones. He also says that it is hard to get people to subscribe if you don’t sell in app. It’s unclear if the Beats music subscription will remain the same price via the app. Competitor Rdio increased the monthly fee to $15 monthly from $10 monthly to cover Apple’s 30%.
The Impact of Apple’s 30% Cut
The 30% cut that Apple takes from in-app purchases has been a point of contention for many companies. This fee can significantly impact the profitability of subscription-based services. For smaller companies, this fee can be a substantial burden, potentially making it difficult to sustain their business model. Larger companies, while better equipped to absorb the cost, often pass this expense onto consumers, as seen with Rdio’s price increase.
However, the convenience of in-app purchases cannot be understated. Users are more likely to subscribe to a service if they can do so directly through an app, without having to navigate to an external website. This ease of use can lead to higher conversion rates and ultimately more subscribers, which can offset the cost of Apple’s fee.
Beats Music’s Strategy and Market Position
Beats Music’s decision to allow in-app subscriptions is a strategic move to capture a larger share of the market. By making it easier for iPhone users to subscribe, Beats Music is likely to see an increase in its user base. This is particularly important in the highly competitive music streaming industry, where companies are constantly vying for subscribers.
The music streaming market is dominated by a few key players, including Spotify, Apple Music, and Amazon Music. Each of these services offers unique features and pricing structures to attract users. For example, Spotify offers a free tier supported by ads, while Apple Music integrates seamlessly with the Apple ecosystem. By allowing in-app subscriptions, Beats Music is positioning itself as a convenient and user-friendly option for iPhone users.
Additionally, Beats Music’s association with high-quality audio products and its focus on curated playlists can help differentiate it from competitors. The company has a strong brand presence, thanks in part to its association with popular artists and its reputation for delivering high-quality sound.
In conclusion, while the 30% fee imposed by Apple is a significant cost, the potential benefits of increased subscriptions and market share make it a worthwhile investment for Beats Music. By updating its iOS app to allow in-app subscriptions, Beats Music is making a strategic move to capture more users and strengthen its position in the competitive music streaming market.
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