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TheStreet Open House

Dr. Dre to Assault Spotify's Streaming Citadel in 2014

Stocks in this article: PGOOG

NEW YORK (TheStreet) -- Streaming music services, like everyone else in the music business, will just have to face it: Dr. Dre is jedi. He's coming and the army arrayed against him is insufficient.

Dre's company, Beats Electronics, is set to enter and disrupt the streaming music space in January, with its Beats Music service, spun off earlier this year as a separate company with Ian Rogers as CEO, formerly the general manager of Yahoo! Music and later CEO of TopSpin Media. After the release, I predict competitors in the space will find themselves playing catch-up for at least the rest of the year and likely for a few years to come.

In an effort to shore up market share ahead of that entry, Spotify recently made a big splash with a series of announcements, including an agreement with Led Zeppelin to stream the band's entire catalog.

An artist of Led Zeppelin's reputation can move the needle for an outfit like Spotify, building credibility, particularly with an older generation of listeners who might not be ready to move to a streaming experience otherwise. But even so, that's only one artist, and that "exclusive" deal is really not so exclusive. Select Zeppelin tracks are already available on Pandora (P).

I also don't think the deal could remain exclusive over the long haul. As a business, Led Zeppelin holds no quarter and no loyalties. It will be looking to maximize profits, period. It's not choosing Spotify as a champion in some ideological or market war. Whatever brings in the most revenue will get the Led Zep blessing. Probably that will ultimately involve at least several streaming services.

Spotify's other announcements have to do with offering free streaming on mobile. It doesn't intend to remain free, but to lead users into relying on its service by offering an open gateway. That's a good step, but if the experience of Spotify is poor compared to another, all the free in the world isn't going mean diddly. And for user experience, in my opinion at least, Spotify has a long way to go.

Supporters of Pandora and Spotify get into fights about which one is and which one should be the No. 1 streaming music service. Both arguments overlook a key point: YouTube is actually the most popular music discovery and music sharing service. And it has always been free across platforms and easily integrates with other social media.

What YouTube doesn't offer is a personalized automated selection process. But for most of us, apparently, that doesn't seem to matter all that much, as we rely on our friends and the like-minded in our networks to help us out. Music is better that way, shared between friends. The experience of listening gains significance when it is also a bonding.

I'm not ruling out the importance of automation. YouTube and services like Spotify can work in tandem. But if the price for both is free, I would rather have the personal recommendations of my YouTube-ing friends than the prescribed service Spotify has to offer. 

For that matter, YouTube itself is promising a subscription version of its experience, although exactly what that will look like remains something of a mystery. Google (GOOG) owns both Google Play and YouTube, so there are also questions about why it needs two such closely related services.

Enter the Master

Meanwhile, if you're looking for a cure for your streaming malaise, I know a good Doctor.

Dr. Dre's and Jimmy Iovine's Beats Electronics have been planning Beats Music for years, at least since the purchase of the music service MOG back in summer of 2012. The new streaming music service is being positioned, like Spotify, as a social media platform for music and prospective users are currently being invited to make sure they get the username they want by signing up ahead of the January release.

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