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Apple to revamp music services: Report

Apple may be singing to a new beat. The tech giant is reportedly working with Beats Electronics to launch a new music streaming business. The New York Times reports that Apple (AAPL) is also reshaping its iPhone music app with the help of Beats Creative Officer and Nine Inch Nail frontman Trent Reznor.

The industry was waiting for a major revamp of Apple’s digital music services for some time now…after all it bought Beats for a cool $3 billion last year.

Yahoo Finance Senior Columnist Michael Santoli says Apple is finally making their music business a priority.

“Apple feels like, whatever we’re spending a lot of time doing--if that’s streaming music--then they want to try to see if they can do it better or do at least, as well. And participate in that… and kind of bring people back into …or into the Apple ecosystem, as they like to call it," he notes.

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But Apple is going to do it its way according to Santoli.

“It obviously shows the Apple approach to it. They are talking about subscription only, not free streaming and also maybe revamping the iTunes stores, maybe getting newer releases, things like that,” Santoli adds.

While this means music lovers will  have more choices, it also translates to more competition for Spotify and Pandora (P).

“If Apple wants to take a segment of the market, they can. They can simply afford to either price it better, either give more variety, incorporate it to their devices in a more seamless way," Santoli points out.

Amazon (AMZN) is also becoming a bigger player in the music industry. Earlier this week, the ecommerce giant upgraded its free music streaming service for Prime members to compete better with Pandora and Apple iTunes Radio.

However, Santoli believes there will be room for more than one player in the music streaming business.

“It is not as if we ever had only one radio network out there….it does seem as if Apple is going to be a big challenge. I don’t think it’s necessarily one of these things where it’s a make or break product line for Apple. They‘re just going to try to incrementally, seemingly make things better," Santoli says.

Last year, for the first time ever music streaming outpaced CD sales in the U.S.

CD sales amounted to $1.85 billion in 2014, while streaming services like Spotify, Pandora and iTunes Radio contributed $1.87 billion to the music industry’s total  revenue of almost $7 billion, according Recording Industry Association of America. 

But Santoli doesn’t think that CDs are going the way of the dinosaurs any time soon.

“Records and CDs co-existed with free radio for a very long time. It’s a matter of Apple trying to cover all fronts on music and not necessarily one thing replacing the other."

Related: S&P 2040, Apple/Beats threatens Pandora & Lulu lowers outlook: What to watch

 

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