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Thursday, June 05, 2014, 06:51 pm PT (09:51 pm ET)

Apple's 'arrogance' wrought mediocre iTunes Radio and led to Beats buy, report says

Amid the furor of Apple's $3 billion purchase of Beats, pundits asked why the Cupertino company would sink so much capital into what amounts to a brand name. A report on Thursday now claims a shortsighted and credulous iTunes management team put out an inferior product in iTunes Radio, which in turn forced the acquisition.

Radio


Citing multiple sources, Buzzfeed claims the Apple's iTunes managers ignored competing streaming music offerings like Pandora to the point where some didn't know that popular app Spotify was a subscription service. The resulting product, iTunes Radio, is feature deficient compared to rival streamers, in both content curation and purpose, these people said.

"The management in particular were pretty much tone-deaf in what Spotify was and that's why they're panicking now," one person said. "They didn't understand how Spotify worked, which is why they thought iTunes Radio would be a Spotify killer."

According to the source, other managers saw Pandora as a "dead company" because of its troubles in generating revenue. Ironically, engineers in the group reportedly preferred the competition's offerings to iTunes Radio, especially Spotify which rolls in serious social network integration.

"Pandora is an awesome radio that blows iTunes Radio out of the water. Seriously, iTunes Radio sucks and it sucks because of Apple's arrogance," said a former Apple employee. "I was floored by the decision-making skills by management over and over again."

With the Beats deal, Apple is thought to have paid some $2.5 billion for Beats Electronics and only $500 million for the firm's streaming business. When Apple CEO Tim Cook announced the deal, however, he reiterated the importance of Beats Music and said the subscription service would be kept intact as a go-along with iTunes Radio.

Some industry analysts saw iTunes Radio as a new way to push iTunes purchases, not an experiment in high quality content curation that many feel is the next step for streaming services. Beats Music touts human music curation as one of its strong suits.

Echoing an "Apple is losing its cool factor" mindset, the mid-level worker also commented on the acqui-hires of music industry guru Jimmy Iovine and rap superstar Dr. Dre, who are both taking positions at Apple in the near future. The new blood is a play for a younger generation of users, which the source said has become an increasingly pressing issue for the company.

It remains to be seen what part Beats and its cofounders will play in Apple's massive iTunes music empire and beyond. After undertaking Apple's biggest-ever acquisition, however, Cook and company likely have something special planned for the new subsidiary.