Beats Music reportedly struggling to pick up subscribers

Senior label executives have cast doubt on the early success of Beats Music in the US, saying its subscriber numbers are lower than expected.

Beats Music LLC, a streaming service started by Jimmy Iovine and Dr. Dre and financially backed by Warner Music Group’s Len Blavatnik, has not released any subscriber figures but label sources have suggested to Billboard that its first 100 days drew less than 100,000 subscribers.

Sources have told Billboard they believe Beats Music invested too much of its $60 million in funding from Blavatnik in the advertising push – which included a Super Bowl TV ad and a mobile bundling deal with AT&T – and not enough on offering a long-term free tier, much like its biggest competitor Spotify.

“We’ve learned from Spotify that you have to fund free for a length of time with users investing time, creating playlists and getting used to the service,” a senior executive told Billboard.

Interestingly, Spotify partnered with mobile phone carrier Sprint in the US. The carrier is the #2 wireless service behind AT&T. Label sources believe Spotify and Beats’ connection with two of the biggest mobile carriers in the US is beneficial for the streaming services as it’s easier and cheaper for users to have the cost bundled into their phone bill than it is to sign up directly.

According to Bloomberg, Beats Music is in the process of closing a second round of equity funding valued between $60 and $100 million. Since its debut in January Beats Music has been consistently compared with Spotify, which launched in Australia in May of 2012 and is now available in 56 markets across the world, with more than 24 million users and over six million paying subscribers.