Tuesday Apple Rumors: Record Label Pressure Driving Apple’s Beats Buy

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Here are your Apple rumors and AAPL news items for today:

daily apple rumors AAPLMotivation: Sources tell Reuters that Apple’s (AAPL) widely-reported $3.2 billion acquisition of Beats Electronics comes as the iPod-maker is facing pressure from major record labels to launch its own premium music streaming service. Apple changed the music industry with iTunes, which allowed users to download individual music tracks. But song downloads declined last year as consumers migrated to streaming services, opting to pay a monthly subscription fee rather than pay for downloads. Apple does not currently have a subscription streaming service, though it launched iTunes Radio, a free streaming service last year. However, Reuters says that record labels have become “dissatisfied with the performance of iTunes Radio” in recent months as subscription streaming has become the “fastest growing revenue source for the music industry.” Beats Electronics has its own premium streaming service. Record labels hope that Apple can build that service into a major player in the streaming market, boosting their revenue. The purchase of Beats would give Apple an established music streaming service as well as music industry deal-maker Jimmy Iovine, co-founder of Beats. Iovine — who has deep connections with record labels — would give Apple added leverage when negotiating royalty and licensing payments with the labels.

iWallet: Wall Street investment bank Morgan Stanley (MS) has joined the chorus of observers predicting the launch of an iPhone mobile payment service, AppleInsider notes. Morgan Stanley analyst Craig Hettenbach says that Apple will add Near-Field Communications technology to upcoming iPhones as a “core part of its mobile payments strategy.” Hettenbach predicts that Apple will use a “stacked NFC radio and embedded secure element solution” in upcoming devices. Recent reports have suggested that Apple is developing a mobile payments system based around its iTunes service, which has hundreds of millions of active accounts tied to user credit cards. NFC technology has other uses aside from payment systems, but most analysts expect Apple to use NFC technology to power any payments service. The introduction of the TouchID fingerprint scanner in the iPhone 5s last year was widely seen as a step toward a potential secure mobile payments system.

Retail Agenda: Apple’s new retail chief, former Burberry CEO Angela Ahrendts, is planning to focus on building Apple sales in China, upgrading the Apple Store sales experience and expanding mobile payments, 9to5Mac notes. Since joining Apple just weeks ago, Ahrendts has already begun making changes to implement her vision for enhancing Apple’s sales. Adapting Apple sales strategy to account for the tastes of Chinese consumers is said to be one of her primary goals. Apple currently has 10 Apple Stores in China, but is planing to boost that to 30 by 2016. Ahrendts, who heads Apple’s online sales in addition to brick-and-mortar sales, has reportedly toured Apple Stores in California, meeting with staff and seeing how the stores function. She is also said to be “holding conference calls with Apple Store managers from across the world.” Boosting over-the-phone service at Apple Stores is one area Ahrendts has already targeted for improvement, along with Personal Setup service and the iPhone trade-in program. She is also seeking to expand mobile payment options at Apple Stores and is hoping to overhaul the complete Apple Store sales experience for consumers.

For more about the company, check out our previous Apple Rumors stories.


Article printed from InvestorPlace Media, https://investorplace.com/2014/05/tuesday-apple-rumors-record-label-pressure-driving-apples-beats-buy/.

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