“My first goal is 500,000 people and we’ll kill ourselves to get there,” Beats Music co-founder Jimmy Iovine said in a January interview. They got off to a decent start, according to Bloomberg, which reports that Beats added 1000 subscribers a day in the month after its late January launch, but still have a long and tough road ahead.
5 Million Subscribers Needed To Be Profitable
Next, a Beats deal with AT&T led to 750,000 signing up for free 30 and 90 day trials, according to the same sources. So far, an impressive 70% percent are said to be converting to paid subscribers.
But, Growth At What Cost?
For a major music streamer like Beats Music to pay licensing fees and become profitable, they need 5 million to 10 million paying subscribers according to Roger Entner, an analyst with Recon Analytics.
Beats' initial subscriber growth came in the midst of a major PR blitz and a very expensive major ad campaign. Their TV ad during the Super Bowl likely cost north of $1 million alone. Even with new financing, that pace seems unsustainable.