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NORTHWEST NEWS

The Skanner in Step With Changing Times

Celebrating a history of service

Starbucks, Home of the $4 Latte, is Moving Into Poor Areas

Starbucks plans to open or remodel 85 stores by 2025 in rural and urban communities across the U.S. The effort will bring to 100 the number of "community stores" Starbucks has opened since it announced the program in 2015

Native American Curriculum Rolls Out in Oregon Classrooms

The state developed the curriculum, as required by Senate Bill 13, with the input of Native leaders for 18 months, but is still behind. A soft roll-out begins this month

Community Surprised at Police Chief’s Departure, Concerned by Quick Replacement

Deputy Chief Jami Resch immediately named as successor.

NEWS BRIEFS

Annual “Salute to Greatness” Luncheon Celebrating Students, Community & Civic Leaders

Keynote Speaker: Ms. Rukaiyah Adams, Chair of Oregon Investment Council & Chief Investment Officer at Meyer Memorial Trust....

Grant High School Students to Read Their Own Work at Broadway Books

Local author and writing instructor Joanna Rose will lead thegroup of young writers at the event to be held on Wednesday, January 22 ...

AG Rosenblum Announces $4 Million Settlement with CenturyLink

Since 2014, Oregon DOJ has received more than 1,200 consumer complaints about CenturyLink ...

Black Guest at Downtown Portland Hotel Sues Over ‘No Party’ Promise

Felicia Gonzales claims the front desk clerk at the Residence Inn told her that all guests had to sign the policy, but she watched...

National Urban League Warns Trump Administration: Don't Weaken Community Reinvestment Act to Allow Racial Discrimination in Lending

Proposed changes to the Community Reinvestment Act could further limit access to the American Dream ...

Fires set stage for irreversible forest losses in Australia

Australia’s forests are burning at a rate unmatched in modern times and scientists say the landscape is being permanently altered as a warming climate brings profound changes to the island continent.Heat waves and drought have fueled bigger and more frequent fires in parts of Australia, so...

Off-duty fire lieutenant stabbed at Portland bar

PORTLAND, Ore. (AP) — Police say they're investigating after an off-duty Portland fire lieutenant was stabbed at a bar.The lieutenant's wife called called from the Kingston Sports Bar and Grill on Southwest Morrison Street at just after 8 p.m. Saturday to say her husband had been stabbed by...

New Missouri coach Eli Drinkwitz predicts success

COLUMBIA, Mo. (AP) — Eli Drinkwitz was saying all the right things after being introduced as the new football coach at Missouri, laying out his vision for the once-proud program with unwavering confidence and bold proclamations.Then the former Appalachian State coach made a minor...

LSU's Burrow, Auburn's Brown named AP SEC players of year

LSU quarterback Joe Burrow is a unanimous selection as the offensive player of the year on The Associated Press All-Southeastern Conference football team.The top-ranked Tigers also have the SEC’s coach of the year in Ed Orgeron and the newcomer of the year in freshman cornerback Derek...

OPINION

Martin Luther King Day is an Opportunity for Service

Find out where you can volunteer and make a difference to the community ...

Looking to 2020 — Put Your Vote to WORK!

Ronald Reagan, who turned his back on organized labor and started America’s middle-class into a tailspin, has recently been voted by this administration’s NLRB into the Labor Hall of Fame ...

How Putting Purpose Into Your New Year’s Resolutions Can Bring Meaning and Results

Only 4% of people report following through on all of the resolutions they personally set ...

I Was Just Thinking… Mama in the Classroom

I wrote my first column in 1988 for a local newspaper about a beloved Dallas guidance counselor and teacher that most students called “Mama” ...

AFRICAN AMERICANS IN THE NEWS

A look at expected participants in Virginia gun rally

RICHMOND, Va. (AP) — State officials and U.S. hate-monitoring groups are warning about the potential for violence ahead of a gun-rights rally in Virginia that's expected to draw a mix of militias, firearms advocates and white supremacists to Richmond. Citing credible threats of violence,...

Martin Luther King holiday: Faith, politics mix this holiday

ATLANTA (AP) — The nation is marking the legacy of the Rev. Martin Luther King Jr. with tributes Monday recalling his past struggles for racial equality, observing the federal holiday named for him against the backdrop of a presidential election year.In an early tribute to King, Vice...

Virginia's capital braces for gun-rights rally

RICHMOND, Va. (AP) — Virginia’s capital city is bracing for the expected arrival of thousands of gun-rights activists and other groups that have vowed to descend on Richmond to protest Democrats’ plans to pass gun-control legislation. Gov. Ralph Northam declared a temporary...

ENTERTAINMENT

'Downton Abbey' creator's new TV show is painfully accurate

PASADENA, Calif. (AP) — The period costumes of a Julian Fellowes drama can be excruciatingly accurate, as an actress in his new series “Belgravia” discovered.The Epix drama from “Downton Abbey” creator Fellowes and executive producer Gareth Neame is set in...

Robert De Niro gets political as he accepts SAG Awards honor

LOS ANGELES (AP) — Robert De Niro received the Screen Actors Guild lifetime achievement award Sunday to praise for his illustrious career and thunderous applause from his fellow performers, but spent much of his acceptance speech on politics. “There's right and there's wrong, and...

Prince Harry: 'No other option' but to cut royal ties

LONDON (AP) — Prince Harry said Sunday that he felt “great sadness” but found “no other option” to cutting almost all of his and his wife Meghan’s royal ties in the hopes of achieving a more peaceful life.The comments were Harry’s first public...

U.S. & WORLD NEWS

'Parasite' parties, Leo greets young fans inside SAG Awards

LOS ANGELES (AP) — Off-camera and during commercials, the stars at the Screen Actors Guild Awards got to...

After cashing in on QB gambles, Niners, Chiefs in Super Bowl

A little more than two years ago, a pair of teams gambled on quarterbacks who had all kinds of potential but were...

Election 2020: The unexpected durability of Biden, Sanders

DES MOINES, Iowa (AP) — When Sen. Kamala Harris’ advisers assessed the Democratic primary field...

Heating pipe bursts in Russian hotel, boiling water kills 5

MOSCOW (AP) — A heating pipe burst Monday in small Russian hotel, flooding rooms with boiling water that...

Fires set stage for irreversible forest losses in Australia

Australia’s forests are burning at a rate unmatched in modern times and scientists say the landscape is...

Violence escalates in Beirut as protesters clash with police

BEIRUT (AP) — Security forces fired tear gas, water cannons and rubber bullets in clashes Sunday with...

McMenamins
Richard Sherman wearing Beats
Ryan Nakashima, AP Business Writer

In this Aug. 17, 2013 photo, Seattle Seahawks' Richard Sherman wears Beats headphones before a preseason NFL football game against the Denver Broncos, in Seattle. Apple's $3 billion purchase of Beats Electronics, by far the company's largest acquisition, is at least in part recognition that Beats founders Dr. Dre and Jimmy Iovine might be able to help Apple incorporate more style and flair into its premium technology gadgets —especially a coming wave of wearable devices. (AP Photo/John Froschauer, File)

LOS ANGELES (AP) — Apple's $3 billion purchase of headphone maker and streaming music company Beats Electronics sheds light on a rarely recognized reality in the music-streaming industry: It's hard to succeed in the business without offering other products and services.

Streaming-music companies like Beats Music, which charge users up to $10 a month, can sometimes pay as much as 70 percent of their revenue in artist royalty fees. That leaves little left for advertising and promotional campaigns to explain to consumers the benefits of paying for a music service.

“The only people that can afford to get into this business have other main businesses,” said Mark Mulligan, a music industry analyst and blogger with MIDiA Consulting. “Every service ends up putting itself into significant debt just to cover its basic operating costs.”

Even streaming leader Spotify — with 10 million paying customers worldwide — is reportedly burning through cash as it seeks to attract enough subscribers to help it turn a profit. With just 250,000 subscribers, analysts say Beats Music is even further from that goal.

Although analysts say Apple's purchase is largely an acquisition of talent and a way to offset the declining popularity of iTunes song downloads, the company notes its main source of revenue has always been from devices. Music is just a hook to make those devices more usable and attractive.

Observers believe Apple's purchase of Beats could have both positive and negative effects for other streaming companies.

On the one hand, if Apple Inc. pushes hard to promote streaming-music subscriptions and makes the idea more acceptable to a broader audience that currently purchases downloads or acquires pirated music, the company's efforts could help all music services.

After all, Apple has been the driving force in many new product categories. It popularized digital music players with the iPod, gave birth to the smartphone era with the iPhone, and was instrumental in creating consumer demand for tablets with the iPad.

“We're cheering from the sidelines,” said Paul Springer, senior vice president of the Americas for Rhapsody International, which has 1.7 million paying music subscribers worldwide. “When the most valuable company in the world says that music subscriptions are strategic to its future, that's great for our sector. That's great for customer awareness.”

Even so, there's a downside for the industry. Apple could easily devalue music subscriptions by running the service at a loss because it makes plenty of money elsewhere. Apple is likely to advertise and possibly offer bundled discounts to make Beats Music a bigger force.

Already, prices across the industry for unlimited streaming plans are starting to drop from the original price of $10 a month. Beats itself offers a family subscription for $15 a month for up to five people, as long as they're on a group account with cellphone operator AT&T. For a limited time, mobile carrier Sprint has cut Spotify Premium prices to $5 a month per person as long as six people are on a family plan.

If Apple creates an even more attractive bundle for people who buy Beats headphones or Apple devices, stand-alone music services may find it tougher to compete.

“It makes Spotify nervous,” says James McQuivey, a digital content business analyst with Forrester Research. “They only have the one revenue stream. It would be harder for them to compete in a marketplace against someone that doesn't have to return the same cash.”

Even before Apple jumped in, the paid streaming music business was in a tight squeeze. Spotify, based in Sweden, reportedly lost about $80 million, despite more than doubling revenue to around $590 million, in 2012. Its results for 2013 are expected in the next couple of months, although Spotify said earlier this month that its paying subscribers jumped 66 percent over the last 14 months.

Rdio, the streaming service backed by Skype co-founder Janus Friis, last year sold a 15 percent equity stake to radio station network operator Cumulus Media Inc. in exchange for $75 million of on-air advertising. The deal was an acknowledgement that cash flow from its operations wasn't enough to pay for marketing.

It's unclear what Apple's purchase means for the value of other streaming operators, because the $3 billion price tag includes some amount for the hugely popular headphone portion of the business, which is profitable and posted $1.1 billion in revenue last year.

What is clear is that music streaming is just a part of the mix for Apple. Figuring out how best to match music with its devices could help Apple stand out in an increasingly crowded consumer electronics market.

“Apple always bundled software well with hardware,” says Moshe Cohen, an assistant professor at Columbia Business School. “That is a big advantage. How to create those bundles is important to producing a superior product and a much bigger business.”

 

Copyright 2014 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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