Apple Inc. (AAPL) Should Opt For Spotify, Not Beats

SpotifyPhoto-Mix / Pixabay

Apple Inc. (NASDAQ:AAPL) may be all set to acquire Beats Music, but not everyone thinks it is a good deal. Recent reports have claimed that the deal is still going through bumpy roads and that nothing can be said with certainty. According to some analysts and market watchers, Apple should think once more before announcing the takeover of Beats, possibly at the upcoming WWDC.

Why is Apple interested in Beats

They think that the iPhone maker is simply interested in the acquisition because the image of the headphone maker complements Apple Inc. (NASDAQ:AAPL)’s own image and entrepreneurs Dr. Dre and Jimmy Lovine are perfect to enter  the organization. These well wishers expect Apple to reveal some kind of odd deal at WWDC, like every iTunes subscriber could get Beats Music for free or something like that. A deal like this will certainly create an impact and would explain why the iPhone maker has announced a keynote live stream so early.

According to Chris Taylor from Mashable, Apple Inc. (NASDAQ:AAPL) should not be interested in buying a company making overpriced headphones which could prove to be a fad after some time. Instead, the company should buy the streaming music service Spotify, which, although it is facing a troubled time, still has massive potential ahead.

Spotify a much better option

Spotify is perceived as a more valuable service for Apple Inc. (NASDAQ:AAPL). The service has a subscriber base of around 10 million, and there are 30 million more subscribers who listen to the free online radio version of Spotify, which is similar to iTunes Radio and considered by some to be superior to Pandora Media Inc (NYSE:P). Also Spotify is quite easy to use if a user wants to download tracks and playlists for offline listening. The music service is way ahead when compared to the very slow load times of music on the iPhone.

Spotify has raised $250 million in venture capital on a $4 billion valuation, which is worth it, believes Taylor.  However, the service is still in trouble, as it has earned very little profits. According to analysts, the company’s losses total $200 million in its lifetime with 10 million users paying $10 per month, which is not enough. The reason behind the increasing losses is that the streaming business has yet to take off, and companies have to pay around 70% of their income as royalties. Also artists still argue that Spotify pays them too little.

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About the Author

Aman Jain
Aman is MBA (Finance) with an experience on both Marketing and Finance side. He has worked as a Risk Analyst for AIR Worldwide, and is currently leading VeRa FinServ, a Financial Research firm. Favorite pastimes include watching science fiction movies, reviewing tech gadgets, playing PC games and cricket. - Email him at [email protected]

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