While Apple Music may have gotten off to a less than stellar start, Apple’s 24/7 radio station Beats 1 has lived up to the hype, quickly becoming the most praised part of the service. But it may not be the only official station from Apple for long. Apple has the ability to expand its lineup of Beats radio stations at will, according to sources with knowledge of the situation.
As part of the deal it struck with the major labels for Apple Music Radio, Apple has licenses for up to five additional stations like Beats 1, without having to renegotiate with the labels. That means Apple could launch a Beats 2 station headquartered in Australia or Asia, allowing it to provide live radio around the clock (Beats 1 is only live 12 hours a day). Or Apple could take a more targeted approach and produce holiday stations.
So far, Beats 1 is the most successful part of Apple Music
While few expected a radio station on Apple Music to be anything other than an afterthought, Apple has shown that it can take an aging format and repurpose it with great success, despite a few bumps along the way. The Verge has also learned that the per-play rate Apple pays the labels for music played on Beats 1 is "better than Pandora," according to a source. Given the reception to Beats 1, it seems likely that Apple would want to expand its Beats lineup in the near future. Apple, of course, declined to comment.
As for Apple Music as a whole, the labels are "pretty pleased" with its progress so far, but are still taking a wait and see approach, according to industry sources. While Apple Music has gained a "substantial" number of users, according to sources, the labels are reluctant to make any judgements on the service until after the trial period ends. One source noted that until Apple Music’s trial period concludes in October, all of its subscribers are only seen as "trialists" by the labels.
The good news for Apple is that, so far, there has been no considerable drop in iTunes downloads due to Apple Music’s launch. Sources indicate that although iTunes downloads are still decreasing (as they have been for some time), that decrease hasn’t noticeably accelerated during the first month of Apple Music. That’s not to say cannibalization isn’t expected down the line. The labels realize that as more and more people sign up for Apple Music, the faster downloads will decrease. As one source put it, there are "choppy waters ahead," but if Apple signs up enough subscribers, the payoff for the music industry could be big in the long run. Though it's highly unlikely that even Apple can return it back to its CD-sales heyday.
Verge Video: Hands-on with Apple Music