Business Matters: Ian Rogers, Trent Reznor Are a Good Team for Beats – Here's Why

Beats Electronics' yet-to-be-unveiled music-subscription service, code-named "Daisy," became a more serious contender Thursday when the company announced Ian Rogers, CEO of Topspin Media, as its new CEO.

But Daisy had already showed it was headed in the right direction when news came out in October that musician Trent Reznor had become the service's chief creative officer and is working on new recommendation features.

Daisy, to be birthed from Beats' acquisition of subscription service Mog, is far behind its competitors but is hardly out of the race. A couple things will help Rogers and Reznor in their quest to make a better subscription service:

1. The pecking order of the subscription market is still in flux.

2. Subscription services are far from mainstream products.

A single, dominant company with a market share near or exceeding 70% characterizes many entertainment digital markets. iTunes dominates the music-download market in the U.S. and elsewhere. Netflix dominates the U.S. video streaming market. Pandora dominates the U.S. Internet radio market.

The on-demand music subscription market does not yet have single, dominant company. In the U.S., Muve Music has about as many subscribers, 1.1 million, as Spotify and Rhapsody, 1 million apiece. Globally, Spotify has a two million-subscriber advantage on Deezer -- 5 million to 3 million, respectively -- even though Deezer is not even available in the U.S.

One reason the music-subscription market lacks a runaway market leader is services are not built, packaged and priced for mainstream consumers. They are services for serious music consumers who will invest a great deal of time and money in the product. They need to become easier to use and a better value for the price. The only exception here is Muve Music, a service built by Cricket Wireless and integrates it into its pay-as-you-go mobile phone service. (Rhapsody bundles its service with pay-as-you-go carrier PCS Wireless in the U.S. and other subscription services are bundled with data plans in other countries.)

Daisy wants to change the temperament of subscription services. Iovine said at Thursday's press conference the upcoming service would provide fans a curated listening experience that creates connections between fans and artists. " I don't believe the 'here's a credit card -- you get 12 million songs' will stick," he said, in effect dismissing the idea that mainstream consumers should will pay for a service simply because they can access a huge amount of music.

Subscription services should provide context, insight and knowledge to go along with the millions of songs on their catalogs. They need to be more human. Trent Reznor, Daisy's chief creative officer, told the New Yorker last month the service would be "like having your own guy when you go into the record store, who knows what you like but can also point you down some paths you wouldn't necessarily have encountered."
 
Both Rogers and Reznor have a history of connecting with fans and making music accessible. Rogers became one of the industry's leading proponents of direct-to-fan interaction and commerce during his time at Topspin. Reznor was a trailblazer in direct-to-fan digital commerce with his band Nine Inch Nails. Both men are proponents of making it easier for music fans to discover new music. That's just what the young subscription music market needs.