Apple Planning On Entering Bargain Basement With Beats

If the jungle drums are to believed, Apple is about to go bargain basement with its Beats streaming service and drop the price (in the US at least) to $5 a month - undercutting every other music service out there.

It's so unlike Apple to compete on price that it's worth reviewing what potential benefits Apple could realise from such a land grab.

Currently Spotify has number one status in the music rental market worldwide. That's not just subscriber numbers, but in mind share too. Whilst there are lesser services that offer radio style playlist streaming, in terms of open access to a music catalogue Spotify is top dog.

Google and Microsoft both have competitive services, but Beats is a bit of an outlier. It's not widely available and it's synonomous with a certain style of music (even if it offers the complete range of music). Beats uses people to create curated playlists - which users say work much better than the technology driven matching of other services.

Still, Beats hasn't really created much of a splash in the streaming market - in May the service was reported to have just over 100,000 paying subscribers. Against the 10 million that pay for Spotify that's weak. And Apple doesn't like to be in a weak position anywhere it's competing. It's an awful lot easier to bargain from a position of strength and as a result Apple needs to build Beats into a truly competitive offering.

Dropping the price to half of what the competition charges - knowing that they don't have the financial muscle to absorb such a price cut - is a good way of doing that. And Apple has shown that it's more than willing to trade short term pain for long term gain.

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