110 thousand subscribers? WOW. impressive. And at what level is it going to level off and will it be profitable at that point? No one knows the answer to that one.
I still don't know why Apple couldn't get their own subscription model going without wasting $3.2 Billion to get 110,000 subscribers. If Apple just turned on this service on their own, which they could have done, they would probably see an even faster adoptance level and they already have 800 Million iTunes account holders to convert, so the conversion rate per customer wouldn't have that $3.2 Billion price tag. Beats doesn't have $3.2 Billion worth of infrastructure. I wonder how much actual infrastructure they actually have. I'm also wondering what value they attached to Beats music vs Beats the headphone company. I see the headphone division the only money maker out of the two. The music service wasn't making any money and Beats was looking for additional funding per another recent article I linked. So they are paying to acquire a money losing venture along with a money making venture. The problem is that selling content really isn't that profitable compared to the costs involved. Even the iTunes store runs at a low Net Profit margin. Same with Netflix, their movie rental business doesn't make much in terms of profit margin, so the whole chasing the content sales/rental business is a really tough business model. I think Apple should have saved their money and did their own model without buying out another company to do it. They could have easily done this themselves. Maybe all they needed was to hire someone else to run the iTunes business to get a subscription service going if the current person couldn't figure it out.