Per Financial Times, Apple Inc. (AAPL) is set to relaunch Beats Music, which it had acquired earlier, in Mar 2015. However, there was no official confirmation regarding the same.
Per reports, Apple will include the paid-for Beats service in an iOS software update, which in turn, will instantly make it accessible to millions of iPhone and iPad users worldwide. The Beats music service is likely to be merged with the iTunes label.
iTunes is one of the means that Apple uses to lure users for its iPhones, iPads and other devices. Digital music sales from iTunes have fallen 13% to 14% since the beginning of 2014. This decline was mostly due to the fact that competitors like Spotify and Pandora (P) are offering a wider selection of music against a monthly subscription.
We believe that this initiative will definitely help the iPhone-maker to combat declining music sales on the iTunes store and aid profitability going forward.
As revenues from music download continue to decline at a rapid pace, subscription-based services are expected to be the next lifeline of the music industry. Apple remains hopeful that the acquisition — its largest to-date — will remain profitable given Beats’ success in music streaming services.
Per ABI Research, music streaming services are expected to generate $5.0 billion in revenues this year. The analyst firm forecasts revenues to grow to $46.0 billion by 2018, which presents a significant growth opportunity.
Further, we believe that the Beats service will complement Apple’s ad-based music-streaming service iRadio, offering it an edge over Amazon.com's (AMZN) Prime Music service and the recently launched service, Music Key by Google’s (GOOGL) YouTube. Further, it will also develop into a steady recurring revenue stream for the iPhone maker over the long run.
Currently, Apple has a Zacks Rank #1 (Strong Buy).
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