Memo to Spotify: Beats Electronics is coming for you.
Beats, whose success with the Beats by Dr. Dre line of high-end headphones transformed a hobbyist niche into a huge mainstream market, has been planning its entry into the streaming music world since at least last year, when it bought the digital service, Mog.
Beats has been slow to reveal its plans, and the streaming market has been growing steadily without it. But two recently announced hires should signal to Spotify, Rhapsody and others that Beats is serious about challenging them.
On Thursday, Beats — whose founders are the hip-hop star Dr. Dre and the music executive Jimmy Iovine — announced that Ian Rogers of Topspin Media would be the chief executive of its digital service, which is code-named Daisy. Last month, a profile in The New Yorker of the musician Trent Reznor (Nine Inch Nails, “The Social Network”) revealed that he was acting as creative director.
The announcement on Thursday offered few details about what music fans (and current Mog subscribers) can expect. Daisy will be based on Mog’s technology to some degree, although executives suggested some changes, like the ability for artists to interact with their fans.
Mr. Rogers, a veteran of digital music well known by music executives and musicians alike, has been a longtime critic of existing digital music services; in 2006 he called iTunes “a spreadsheet that plays music.” On Tuesday, Mr. Iovine characterized the appeal of existing services as, “Give me your credit card, here are 12 million songs, and good luck.”
All digital services have to some degree or other been struggling with that perception. Last month, for example, Spotify introduced a number of features to help users find music on the service, like the ability to follow favorite artists and cellphone alerts for new songs.
A bigger challenge, however, is growth. Spotify has five million paying subscribers, Rhapsody about one million, and other American services are believed to be far behind. While Pandora has built a huge audience offering a free digital alternative to radio, and Sirius XM has gotten nearly 24 million paying subscribers for its version of radio, so-called on-demand services like Spotify and Rhapsody — which let consumers pick exactly what songs to listen to — have been slow to penetrate the mainstream.
Beats, however, has a major advantage in reaching everyday consumers: its headphones, which have become popular enough to be fashion accessories. The company is estimated to have more than $1 billion in sales, and says that it has nearly two-thirds of the premium headphone market. Beats headphones range from $100 earbuds to a $400 “pro” model.
Mr. Rogers, 40, got his start in the music business when the Beastie Boys spotted the fan site he had made in college, and hired him to run its Web operation. He later worked for Yahoo Music before joining Topspin, which offers online tools to musicians and record companies to help them market and sell music. (The Beastie Boys and Nine Inch Nails are two of its most prominent clients.)
“This is the gig I’ve been training for my whole career,” Mr. Rogers said.
Beats also made an investment in Topspin, which will continue with Jeremy Bellinghausen as its chief executive and Mr. Rogers as its executive chairman.
Ben Sisario writes about the music industry. Follow @sisario on Twitter.
Media Decoder Blog: With 'Daisy,' Beats Electronics Bets on Digital Music
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Media Decoder Blog: With 'Daisy,' Beats Electronics Bets on Digital Music
