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TheStreet Open House

3 Top Hip-Hop Names Rewrite the Rulebook

Stocks in this article: T

Beats Electronics, co-founded by hip-hop mogul Dr. Dre and Jimmy Iovine, chairman of Universal Music Group's Interscope Geffen A&M Records, is in talks with AT&T (T) regarding the launch of its streaming music service, Daisy, built from Beats' acquisition last year of the streaming portion of MOG's music service.

With Dre and Iovine's music biz connections and some serious cash behind the project, Daisy easily could be huge.

Citing sources close to the talks, CNET reported this week that the goal is to give AT&T data-package users Daisy for free for a period, in order to gain a wide exposure for the service.

Sounds like the same sort of deal Jay-Z struck with Samsung, right? In a word, no. But there are parallels and important lessons the Daisy team can learn from the shortcomings of the Magna Carta pre-release.

The most obvious difference is, Daisy is a distribution organization; Jay-Z, in this case, is an individual artist. The Samsung deal served to compromise Jay-Z's perceived integrity, barely different than had he been paid to write a song for a Coca-Cola ad. In addition, through Samsung, he was privileging an arbitrary audience, cheapening his relationship with his core fan base. In the world of music generally and pop music specifically, that's so not cool.

Daisy doesn't have either of those concerns. Any deal will only widen the existing fan base of the artists in its playlists without alienating anyone. Done right, the setting could elevate any music Daisy decides to include to a new level of recognition.

On the other hand, Daisy could take a warning from Samsung users' problems with the Magna Carta download. Daisy executives better be sure the technology performs as expected on AT&T's side. The first taste of Daisy has to be sweet, or it will surely turn into a PR nightmare.

In the end, Daisy will likely live or die based on the user experience. There is already tough competition, with users switching between Pandora (P), Spotify, Rdio and, soon to come, Apple's (AAPL) iTunes Radio for their listening experiences.

Beats CEO Jimmy Iovine thinks its approach of using trained musicians and musicologists to create playlists for its users will separate its service from the competition. Having Trent Reznor as chief creative officer will certainly help ensure that the music-queuing process gets the proper attention.

Most of these music services use algorithms to select tracks. Pandora has trained musicians on staff, but they aren't creating playlists; they're filling in the database behind the Music Genome Project with some 450 parameters for each track. That enables the selection process to be incredibly detailed -- a robust algorithm. But it's still an algorithm, a robotic choice.

As I wrote in the June 14 column, Music Needs Tribal Streaming, the algorithm approach creates an individuated and essentially isolating experience for the listener where music's power rests in joining members of a community.

Picking the playlists is what radio djs and music promoters used to do, back when people would gather around a radio or a jukebox to hear a song. While creating playlists detracts somewhat from the trend to individual choice, it is a more reasonable and honest approach to the actuality of music as a shared experience.

It also returns to the programmers and promoters some of their lost power to dictate listener tastes, increasing their profit potential in the process. That isn't necessarily a bad thing; some leadership is necessary to build a vibrant music culture.

True, the abuse of that power created some nasty turns in the history of the music business. But we are yet a long way off from that kind of problem. Daisy has not yet launched and others using such a curated approach, including the much smaller Songza, are generally much more limited in their reach.

The music biz contacts of Iovine and Dre will undoubtedly also help Daisy with royalties costs. The problem Pandora and others are having in this new field is creating equitable deals for content that leave everyone happy. Perhaps none of them is in a better position to craft such deals than Daisy.

-- Written by Carlton Wilkinson in Asbury Park

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