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Samsung Likely to Shutter Milk Music Service (Exclusive)

Updated. Samsung is likely going to shutter its Milk Music streaming service in the near future as part of a bigger revamp of its music strategy, Variety has learned from multiple sources. However, Samsung denied rumors that it was going to buy Jay Z’s Tidal service in a statement sent to Variety Friday hours after the original publication of this story.

The shut-down would come two years after Samsung unveiled Milk Music with big fanfare as a competitor to Pandora. The service, which offers consumers personalized radio stations, had initially been exclusive to owners of select mobile devices made by the company. Samsung later opened up Milk Music on the Web, and brought it to its smart TVs as well, but never released apps for phones from other manufacturers.

Milk Music was initially meant to be part of a bigger move toward a new generation of media services that would add value to Samsung devices while also adding incremental advertising and subscription revenue to Samsung’s bottom line. As part of that strategy, Samsung launched Milk Video as a platform for short-form video content in late 2014. There had been plans to branch out with the Milk brand into sports and other forms of entertainment as well.

But late last year, Samsung shuttered Milk Video after it failed to gain traction with consumers. Now, it looks like Milk Music may be heading for a similar shut-down. A source close to the company told Variety that Samsung executives are looking to “clean house” after spending significantly on Milk Music without seeing the expected returns. Another source with knowledge of the project said that the service’s free component has seen some traction with consumers, but that hardly anyone bothered to pay for Milk’s premium tier, much to the dismay of senior executives.

A first sign that Milk Music was in trouble was on display at the Consumer Electronics Show in Las Vegas earlier this year. During the show, executives touted how well Samsung’s TVs work with third-party media services, but didn’t mention or show Samsung’s own Milk Music smart TV app at all. And when Samsung recently introduced its new Galaxy S7 and S7 Edge smart phones, Milk Music was again nowhere to be seen.

Insiders and sources close to the company also told Variety that the Milk Music team has seen significant staff reductions over the past couple of months. “A lot of people in the organization have left or are shifting positions,” said one source. A post to the job review website Glassdoor indicates that Samsung Research America, the organization that includes the Milk Music team, was hit with layoffs over the past few weeks, something that a source close to the company corroborated. “There are lots of empty desks and cubes there,” that source said about the Milk Music team.

“It is our policy not to comment on personnel matters,” a Samsung spokesperson told Variety. “Samsung remains committed to delivering engaging, connected entertainment experiences through our Milk platform.”

It’s worth noting that this is literally the same statement Samsung sent out when Variety first reported about troubles at Milk Video in May of 2015. Four months later, it announced the shut-down of Milk Video. Samsung does still operate its Milk VR service on the Gear VR headset, so committing to the Milk platform wouldn’t prevent the company from getting rid of Milk Music.

It’s still unclear what exactly is going to replace Milk Music. Samsung had been in talks with Tidal about a potential acquisition, and Tidal owner Jay Z even stopped by Samsung’s campus to meet with the company’s executives last October. The New York Post reported last month that the two parties have picked up talks again.

However, multiple music industry insiders cautioned that an acquisition may be far from certain even before Samsung’s official denial. Many see a partnership with Tidal or another streaming service as a likelier option.

This would also fit better in Samsung’s overall strategy: After failing to get its own services off the ground, Samsung has over the last year or two moved toward striking deals with high-profile partners. In 2014 Samsung shut down its own electronic book store to partner with Amazon on a customized Kindle app for Samsung devices. And at CES, Samsung announced a new “Made for Samsung” program that will include co-branded apps from partners like Expedia, CNN and the Weather Channel.

Update: 6:30pm: This story was updated with Samsung’s statement that it won’t buy Tidal. Read more on this development here.

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