ESMG Crew

Three weeks after rumors broke of Apple’s purchase of Beats Electronics, the company has confirmed that it is buying the headphone and streaming music service for $3 billion, $200 million less than the originally reported amount. Jimmy Iovine and Dr. Dre, the company’s co-founders, will join Apple in unspecified roles as part of the deal.

Apple said in a statement that, subject to regulatory approvals, the company will close the deal in the fourth quarter of their fiscal year, or by September 28th.

“I’ve always known in my heart that Beats belonged with Apple,” Iovine said in a statement. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Apple’s CEO Tim Cook added. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

Universal Music Group (UMG) Chairman and CEO Lucian Grange praised Iovine in a statement, noting that “history teaches us that great entrepreneurs are few and far between.”

“Jimmy Iovine is one of that small number of entrepreneurs who, by doing so much so well in so many different arenas, have left their indelible mark,” Grange said. “Based on mutual trust and respect, UMG’s singular relationship with Jimmy permitted his innovation to flourish in all these ways. We thank Jimmy for both the incomparable leadership he’s provided to Interscope and UMG and for the highly beneficial partnership UMG has enjoyed with Beats. We wish Jimmy the very best and look forward to enhancing our partnerships with Apple and Beats for many years to come.”

Apple reps have not specified the company’s strategy in buying Beats, but analysts and experts have filed dozens of speculative reports. Some say Apple is seeking Beats’ audio technology to beef up tinny-sounding MacBook speakers and even tinnier-sounding earbuds. Others say the play is for Beats Music, the streaming service that has emerged as a competitor to Spotify, although reports have leaked that it has only 111,000 users. Still others suggest the purpose is to fold celebrity businessmen Jimmy Iovine and Dr. Dre into Apple as a posthumous replacement for the late Steve Jobs’ star power.

Iovine and Dre founded Beats by Dre in 2006 after recognizing a niche in the high-end headphones market between expensive audiophile models and earbuds, which had become ubiquitous with the rise of the iPod earlier in the decade. “Apple wasn’t focused on sound,” Iovine said earlier this year. “They were selling an iPod.”

Beats is the number-one headphones maker, bringing in more than $500 million in revenue in 2012. The company expanded into streaming music in January, launching its $10-per-month Beats Music, hiring Nine Inch Nails’ Trent Reznor as chief creative officer and emphasizing “curation” — advising music fans on what songs to play. It was a smart move, as streaming music has become more dominant over the past two years and iTunes-style sales of albums and tracks have plunged. But Beats’ low user numbers may suggest that the streaming business is already full.

On Wednesday Spotify revealed it now has ten million paying subscribers and 40 million active users. CEO and founder Daniel Ek spoke to Billboard about what the numbers say about where the industry and his own business is right now.

Billboard: What do these growth numbers say about the current state of the industry?
Daniel Ek: Not only have we proved that the more people play, the more likely they are to pay, but we’ve really become truly global now. Our two biggest markets now are the US and UK. Now this reflects actually what the global music market looks like — we’re not in Japan yet of course – (the third largest music market most years). This isn’t just a Nordic phenomenon anymore.

So what’s your fastest growing market?
As a region, Latin America is really growing fast. Brazil is coming in the last week of May. The US, UK and Germany are also growing really well.

What’s your most competitive market?
Of course the US. We don’t really think there is a service that’s “just like” Spotify – but of course it’s everything from YouTube and Pandora to Rdio.

What is driving the growth for Spotify right now?
We’ve seen a huge uptake in growth since we launched our mobile free service in December. We’re seeing a good chunk of those users wanting to pay for the service once they start to use it. So people are coming in on mobile and then turning into paid subscribers. I can tell you that about 80% of all people who sign up to Spotify, sign up on mobile first. The business has gone from being Europe-centric – to now being global where big music markets are also our big markets. Now we’re in Europe, US, Latin America and Asia and we’ve really become mobile-first. Users are spending more time using mobile devices – but there’s a lot of people who still have multiple devices depending on what they’re doing. If you look at a market like Latin America, it’s all mobile and tablet – no PCs.

Have you reached a tipping point now in terms of awareness? Is there a number that is “the benchmark” for making a difference?
I feel now that with ten million subscribers, we’re at the place where – if you look at similar services – this was the point where they started really taking off compared to the competition. Last year, there was a lot of talk about competing services being close to us. Now, no one is even close to where we are on the subscriber side.

How do you work out what is a reasonable amount of music for people to listen to and still be profitable?
We really don’t care much about that. We just think usage is good. If we focus on building the best possible product to get you to listen to even more music, we’re certain that people will pay. This isn’t like a gym membership where people are expected to sign up and never use the service! We want it, the labels want it, the artists want it.

What does the Apple acquisition of Beats mean to Spotify?
There has been a lot of people speculating on the news and what it means. I don’t know. I don’t like speculating about things that haven’t happened.

If Apple did buy a streaming service, do you generally think it makes the pie bigger or just more competitive?
The one thing I can say – we know streaming is the better model in music and we’ve said that for over 5 years — when everyone else said it wasn’t the case. I’ve always assumed Apple would offer a streaming service at some point – but we’re focusing on building the best possible product and feel pretty good about that. Users know the difference between something that really is the best product and not something that’s just bundled in – and 10 million subs is a good indication of that. We’re not fighting over market share here. The music industry is still smaller than it should be. And in the UK, we’re seeing that streaming (and we) are already growing the overall pie.

Is there a timeframe for how much longer you can use the freemium model to give away music?
Long term, we think that music has always been freemium. Music was free on radio and then you went and bought it. Streaming is the equivalent of that. We think that if you care about music, the more likely you are to pay – and the more we can get people into music (by listening more), the more will become a paying customer.

Given the never-ending reports about you going public, is this the year in which you feel you have to make a decision one way or the other?
No, not at all. There’s so much speculation but really that’s all it is. We’re not focusing on an IPO and I’ve said that publicly many times. It’s not something I’m spending a lot of time thinking about. Of course at some point our investors want to get their money back – and we’ll figure that out. But there’s no rush in that and no one is forcing us. The focus right now is building the company and growing faster. We’re still in the early days. I feel we’re running a lot faster than ever before and 10 million is not a bad number if you look at other comparables, so we’re on a great path.

The number of paying Spotify subscribers has grown to 10 million globally, driven by mobile usage — noting a major landmark number for the music industry as it looks to monthly streaming services as the future of the business.

Yet it is the rate of growth in the music business’ No. 1 market in the United States that is most pleasing to industry insiders. According to sources familiar with the company’s data, Spotify has swelled to more than 3 million paying subscribers in less than three years since launching here in July 2011.
The last time Spotify revealed user numbers in March 2013, it had 6 million paying subscribers globally. A key part of Spotify’s strategy is to offer free access to various levels of its service. It now has more than 40 million monthly active users including the 10 million paying subs – one in four.

“This shows that our conversion rate is working,” says chief executive Daniel Ek. “We’re proving the more people play, the more they’ll pay.”

Spotify is revealing these numbers as talk around the possibility of an initial public offering heats up – potentially for later this year at valuations well north of the $4 billion mark it passed with its last private funding round in November.

For public investors in the consumer Internet space, the strongest interest is with digital media companies that are growing users at a rapid tick. While it is not the pace or scale of a Facebook, Spotify is easily the biggest and likely fastest growing of similar music subscription service rivals, including Rhapsody, Deezer, Rdio and Beats Music – currently the subject of Apple’s $3.2 billion bid for parent Beats Electronics.

Muve Music, a bundled service with Cricket Wireless, is estimated to have around 2 million U.S. subscribers. Rhapsody revealed last month it now has 1.7 million subscribers globally. It is estimated just over half are in the U.S. Deezer has reported 5 million subscribers with the majority in its home country France – it is not yet in the U.S. Rdio is believed to have under 500,000 in the U.S., while newcomer Beats Music had around 200,000 subs in its first three months, according to sources.

Ek said the recent rapid growth with Spotify was fueled by the roll-out of its free mobile service in December. He said more than 80 percent of all subscribers that sign up now do so through mobile phones.

“We’ve really become a mobile-first company,” he said.

Based on Spotify’s current rate of growth and people familiar with its internal data, Billboard estimates it will pay up to $1 billion to the labels and publishers this year alone. As of last December, the company had paid out up to a total of $1 billion in licensing fees to the music business since its October 2008 launch.

Overall U.S. paid subscription revenues rose 57 percent to $628 million last year and the number of subscribers rose 81 percent to 6.1 million, according to the RIAA.

The news of Spotify’s growth comes as speculation mounts about the company going public later this year. The anticipation has grown as Spotify has advertised for SEC regulatory staff, agreed to a $200 million credit line with several Wall Street banks, inked a partnership with Sprint wireless partnership, expanded in Latin America and acquired EchoNest, a data service.

The growing licensing fees, which rise with fans’ usage, has meant that Spotify has yet to turn a profit as it ramps up.

This could be a red flag for some investors, but it is also likely that most will focus on the subscriber growth.

“Growth is paramount, because if you’re not growing there’s no chance of improving profitability,” said Eric Jackson, a seasoned technology investor and founder of Ironfire Capital.

The growth of Spotify’s paid subscriber base is potentially very good news for the music business. After more than 15 years of year-on-year declines as CD sales shrunk and several false dawns of bounce-backs, it is understandable executives are privately positive but also remain cautious.

For one thing, it is not yet certain streaming subscriber numbers will grow fast enough to make up for the slowdown of song downloads, which have decreased some 13 percent so far this year compared with a year ago. U.S. paid subscription revenues, however, rose 57 percent to $628 million last year and the number of subscribers rose 81 percent to 6.1 million, according to the RIAA.

The world’s largest music company Universal Music Group said in its first quarter financials that its sales had dipped by 2% because, despite streaming services’ strong growth, it was unable to offset downloads’ decline.
But there is also plenty of reason for optimism given Spotify is just one player and others like Apple are still keen on entering the market.

The most recent edition of The New Yorker magazine contains an article about neuroscientists who study the way the brain retrieves memories. What they’ve found out is probably the most important breakthrough of all time in the field of success training.

How the Brain Remembers

Most people think about human memory as a videotape or computer memory. When you remember something, you’re playing back the memory, which is vivid or vague depending on how good you are at remembering things.

It turns out that human memory isn’t like that at all. When you remember something, your brain is “rewiring” the connections between neurons, literally changing the structure of your brain.

Rather than video playback, human memory is more like video editing. When you remember something you are recreating, changing, and re-memorizing. The memory is subject to change every time you remember it.

According to the latest research, it’s possible to intentionally edit bad memories to remove the bad feelings associated with those memories. This new memory therapy is being used treat to PTSD sufferers.

What This Means to You

Your attitude and behavior–the two things that make you successful–are heavily influenced by your memories.

For example, if you’ve experienced a painful failure in the past, you’re more likely to avoid taking risks, even when they’re smart risks.

Similarly, if you’ve had successes in the past, you’re more likely to take actions to repeat those successes, if you have vivid positive memories about them.

The reason that this research is so important is that we now know that you can:

Edit your bad memories so that they don’t hold you back.
Edit your good memories so that they propel you forward.
In other words, you can literally rewire your brain to make you more successful.

How to Weaken Your Bad Memories

The method described in the article is almost exactly the same as a method that author and motivational speaker Anthony Robbins (of all people) has been training people to use for the past two decades.

To extract the poisonous fangs (as it were) of your bad memories, bring the memory into your mind, and then imagine it getting smaller and dimmer, like you’re watching a tiny black-and-white TV.

Now add details that scramble the memory. For instance, if you’re remembering a time when you flubbed a presentation, turn the audience (the little bitty audience in the little bitty screen) so that they’re all wearing clown suits.

Do this five or 10 times and you’ll discover that the bad memory simply doesn’t sting any longer. If anything, the memory of that presentation will make you chuckle, because you have literally and physically rewired your brain.

How to Strengthen Your Good Memories

To make your good memories more powerful and motivating, you do the same thing in reverse. You call the memory up as vividly as you can, on a huge IMAX, surround-sound screen. Make it bright and loud.

Most importantly, insert or increase the wonderful feelings that you experienced in that situation.

Do this five or 10 times and you’ll discover that what was once just a happy memory is now a driving motivation. The more you experience the memory, the more you’ll want to make it real again.

I’ve been using this method on and off for years, without really understanding why it works. Now that I know the neuroscience behind it, I’m going to make editing and improving my memories into a daily habit.

You’ve slaved over your latest content project and you’re sure it’ll be a hit. It’s graphically interesting, packed with useful information and highly relevant to your audience. It’s time to sit back and watch it go CRAZY on social media.

And if you believe that, I have some snow to sell you.

Content generally doesn’t get picked up by media or have the slightest chance of going viral on its own (well, not unless or you’re a dancing goalie–then you can sit back and watch the hits roll in).

A really awesome piece of content deserves all the promotion you can throw at it, to get it in front of the most relevant, engaged audiences. These 10 content promotion tactics have helped me get mentions and valuable coverage from WSJ.com, Business Insider, The Associated Press, Thompson Reuters, Fox Business News, and literally thousands of other news outlets. Try them out!

1. Build Your Media Network

This is a critical first step–you can’t pitch to your network if you haven’t invested any time in building it. Seek out the people who write about the topics you’re interested in; the journalists, the publishers, the editors. Get to know these people. Share their content. Bring them story ideas even when you have nothing to gain personally from them. When you do have a story to pitch, you’re not coming at them like a cold-calling telemarketer.

2. Leverage Twitter for Pitching

Journalists use Twitter; in fact, three-quarters of journalists use Twitter to find their stories. If you want to get in front of journalists, you absolutely have to be connecting with them on Twitter. I once pitched a guy from the Guardian newspaper who got back to me with a published story in just a few minutes!

3. Get in Front of Industry Influencers

There are super-connectors on social media in every niche or industry who can help spread the word. These people are usually happy to do so when the story is relevant and interesting to their audience.

For example, I once pitched Tim O’Reilly. He’s the publisher of O’Reilly Media and has over 3 million followers on Google+. He posted a link to the story on his timeline that generated over a hundred re-shares and tens of thousands of visitors to our content.

4. Optimize Your Visual Assets

To help with content promotion, though, easily shareable visual assets like charts, memes, photos, graphs and more help you get social shares and appear in a variety of searches. Use descriptive filenames for your images, optimize your alt tags, and use image sitemaps to ensure your visual assets are findable. Offer these images up for use by media, who definitely appreciate multimedia assets to build out their stories.

5. Plan a Series

I think of my content projects as campaigns, rather than individual stories. Don’t let your story die after one iteration; come up with a minimum of three follow-up stories ahead of time. In a content campaign about the value of Facebook vs. Google Display ads during the Facebook IPO run-up, for example, we created several follow-up stories to keep the momentum going: reasons to buy Facebook stock, reasons to sell Facebook stock at the IPO, why General Motors dumped Facebook ads, etc.

These follow-up stories all refer back to the original story and keep it alive for another news cycle.

6. Syndicate Your Blog Content

Media often refer to other publications when someone else has the scoop. If you’re putting time and effort into developing your own stories, see if you can syndicate your blog content. It takes a lot of time and effort to create original research, so I syndicate some of my blog articles on Yahoo Small Business and others; it definitely helps expand our reach and you have more credibility with media when you’re appearing in mainstream media outlets.

7. Target International Press

About 50 percent of the more than 10,000 press mentions we got in our Facebook IPO content campaign were from international publications. Start by targeting media outlets that translate articles from one language to another, like AP, AFP, Thompson Reuters, Dow Jones, and IDG. If you’re appearing in these massive publications, you’ll have no trouble getting smaller, international local news outlets to pick up your story.

8. Don’t Forget Traditional Media

Television and radio coverage can still be incredibly effective for authority building. TV and radio stations have journalists and editors looking for stories, too.

We’ve been covered on NPR and BBC, and on television stations like Fox Business, which turned out to be a great driver for more press pickups. Most TV and radio stations also have digital outlets, which means you might then be appearing on YouTube, in podcasts on iTunes, etc. Make sure you know everywhere the content will end up so you can promote it through your social and email marketing channels.

The key to making all of this work together is in having a solid plan for promotion right from the initial content planning phase. The brand and authority building benefits can be massive–but you need to plan to promote or you’re planning for a solid flop when you release that next awesome piece of content.