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TheStreet Open House

Apple Can't Lose Unless It Beats Itself


So Beats pitched Apple on its view of the world, particularly as it pertains to music. And Apple bought it. Exepct Apple to hyper focus on being that central spot on the Web for musicians to locate and build their brands. And, in typical Steve Jobs-fashion, expect Apple to bring people what they want (the value of subscription-based streaming) before they know they want it.

Tall order. Apple can and will get the central sport on the Web for musicians part done. That's relatively easy. It's the second part of the equation I'm not so confident about. Attempting to change behavior is a risky proposition. Jobs did it several times. Amazon.com (AMZN) basically did it once, but in very different contexts. Not in situations where people expect to get their music for free. I love subscription-based streaming, but most others do not. At least not right now. 

While I'm skeptical that Beats Music can succeed as positioned -- even inside Apple -- I'm impressed not merely that they want to try, but how deeply they believe in the righteousness of what they're doing (even if it might be ill-advised). I'm impressed that Apple, as it seems to me, wants to give Beats Music the opportunity to realize its vision. That says a lot about Tim Cook, who appears, at least in this regard, to be every bit the dreamer as Steve Jobs.

And Beats will be better off inside Apple, particulalrly if Apple gives it the resources it needs alongside some breathing room. Beats Music can lose money under Apple and it won't matter because it will be subsidized by Apple. Like a coach who faces the media for his players, Apple will provide cover for Beats Music. It will be part of Apple's larger ecosystem strategy, which provides both the aforementioned cover and opportunity.

While Apple absolutely can't miss with iPhone 6 (it's going to freaking demolish Android), it might miss on this Beats deal. As I see it coming together, it's an incredibly risky undertaking. But I'm proud of Apple for going there (assuming it actually does!). I also realize it's sort of like a half risk for Apple. If Apple fails or just barely succeeds with Beats, it's not going to impact the dominance of iPhone 6, which will probably be the central Apple story of late 2014 going into 2015 anyhow. If Beats Music comes through on or ahead of schedule, that'll be icing on the cake. Otherwise, it's spun as a long-term opportunity still in its infancy, coupled with an already successful and quite killer headphone brand.  

--Written by Rocco Pendola in Santa Monica, Calif.

>>Read More:

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Rocco Pendola is a full-time columnist for TheStreet. He lives in Santa Monica. Disclosure: TheStreet's editorial policy prohibits staff editors, reporters and analysts from holding positions in any individual stocks.
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