Apple acquires Beats Music and Beats Electronics for $3 billion

Apple acquires Beats Music and Beats Electronics for $3 billion

It's official, Apple has just announced their intentions to acquire Beats for $3 billion. The deal will include both streaming music service Beats Music and Beats Electronics. The mammoth deal will see Beats co-founders Jimmy Iovine and Dr. Dre joining Apple.

Press release below:

CUPERTINO, California—May 28, 2014—Apple® today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.

"Music is such an important part of all of our lives and holds a special place within our hearts at Apple," said Tim Cook, Apple's CEO. "That's why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world."

"I've always known in my heart that Beats belonged with Apple," said Jimmy Iovine. "The idea when we started the company was inspired by Apple's unmatched ability to marry culture and technology. Apple's deep commitment to music fans, artists, songwriters and the music industry is something special."

Iovine has been at the forefront of innovation in the music industry for decades, and he has been an instrumental partner for Apple and iTunes® for more than a decade. He has produced or collaborated with some of the most successful artists in the history of the iTunes Store®, helping make it the world's number one music retailer. Iovine and Dr. Dre are sound pioneers, artists and entrepreneurs.

Beats Electronics has brought the energy, emotion and excitement of playback in the recording studio back to the listening experience and has introduced an entirely new generation to premium sound entertainment. Beats Music was developed by a team of people who have each spent their entire career in music and provides music fans with an incredible curated listening experience.

"Music is such an important part of Apple's DNA and always will be," said Eddy Cue, Apple's senior vice president of Internet Software and Services. "The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years."

In just five years since launch, the Beats "b" has become the brand of choice in the music and sports worlds, and is the market leader in the premium headphone market. Music superstars including Lady Gaga, Lil Wayne and Nicki Minaj have designed their own customized Beats headphones and speakers. Fashion designers and street artists such as Alexander Wang, Futura and Snarkitecture have collaborated on special limited products, while renowned athletes including LeBron James, Serena Williams and Neymar use Beats as a critical part of their training and game day process. Beats has quickly become part of pop culture in the US and with the acquisition the Beats product lineup will be offered in many more countries through the Apple Online Store, Apple's retail stores and select Apple Authorized Resellers.

Subject to regulatory approvals, Apple expects the transaction to close in fiscal Q4.

Formally established in 2008 as the brainchild of legendary artist and producer Dr. Dre and Chairman of Interscope Geffen A&M Records Jimmy Iovine, Beats Electronics (Beats) comprises the Beats by Dr. Dre family of premium consumer headphones, earphones, and speakers as well as patented Beats Audio software technology and streaming music subscription service Beats Music. Through these offerings, Beats has effectively brought the energy, emotion and excitement of playback in the recording studio to the listening experience and has introduced an entirely new generation to the possibilities of premium sound entertainment.

Beats Music is a subscription streaming music service that focuses on providing a personalized music experience for each user through a unique blend of digital innovation and musical passion. Programmed by a trusted team of well-respected music experts with over 300 years of experience across all genres, Beats Music delivers the right music for any situation, any time, and any preference, personalized to your tastes. The result is an artist-friendly digital music service that does more than simply offer access to music, but one that establishes an emotional connection to it as well.

Apple designs Macs, the best personal computers in the world, along with OS X, iLife, iWork and professional software. Apple leads the digital music revolution with its iPods and iTunes online store. Apple has reinvented the mobile phone with its revolutionary iPhone and App Store, and is defining the future of mobile media and computing devices with iPad.

Source: Apple

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Reader comments

Apple acquires Beats Music and Beats Electronics for $3 billion

43 Comments

This was my sentiment unless there was something big that we didn't know about. Everything announced yesterday was rumored, so there was no big surprise & my initial reaction is still pessimism.

Clearly Apple places more importance in subscription music services than I do. Or perhaps it’s more accurate to say that they value ‘music’ (in a border sense) so deeply that they want to make an impact in the way that industry evolves in the coming years. They value it so much that they don’t really look at it from a profit view point.

I have more confidence they can incorporate the headphone/hardware business into their existing processes. Apple will greatly improve build quality while retaining the brand attraction & trademark ’sound’ that consumers love. Hardware should continue to be very profitable. Aside from headphones & earbuds, speakers & car stereos I think were also mentioned.

So although I have doubts, I also believe the folks at Apple are the best at what they do. They can still make mistakes and time will reveal whether this acquisition was a mistake or another brilliant move.

I'm not really sure, what attracted Apple to Beats in the first place. But, I'm curious to see how Apple integrates this purchase into its business model.

Oh, and queue the "rappers don't belong with Apple" comments, lol.

The fact Beats Music is highlighted in the presser makes me think we'll be seeing something on the music service front. Iovine and Dre know music...regardless of the crappy headphones, they've obviously done something right!

+1 Considering that there are infinitely better high-end headphones on the market and they are still not only in existence, but making a profit selling an over priced product is genius in and of itself.

iTunes isn't the money maker for Apple it once was. iTunes revenue has been going down pretty constantly the last couple of years. The future of music is On Demand streaming like Spotify Beats Google Music Deezer Xbox Music. That's the future. Just like digital music sales mainly from iTunes hurt psychical music sales and digital became the dominant type of music sales. Streaming services like Spotify are hurting all music sales.

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LOL...I'm waiting for that too!!!! Even though DJs all over mainly use Apple products! This is gonna be interesting LMAO

It makes sense on paper, but the optics don't align. Apple's upscale image, versus Beats' shallow flashiness? It looks like a match crafted in the Accounting department by the bean counters. How does this possibly uphold the Apple philosophy of quality?

Honestly, I can see why you would say that. But, I see it as one company that sells high-end products purchasing another that does the same. Both sells products at the higher-end of the market. It may be more of a match than we are giving credit for.

It's all about the streaming music service. Streaming music is hurting iTunes and not just iTunes but all music sales. iTunes music revenue has consistently been going down the pass few years and quarters.

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To spend that amount of cash on Music?!?! A company like Apple can't get their own Music service going within their software products?? I don't see Beats as a "wow" just like any other music service out there..

I can't wait to hear what people in the industry who were on a "no" kick for the acquire are going to say. Yes I'm looking at you Leo Laporte lol

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Subscribed to Beats Music out of curiosity when they launched. Expected a terrible fit to my tastes (real jazz, classical, classic rock and alternative) and was pleasantly surprised when they quickly grokked me and made a bunch of excellent suggestions -- so pleasantly surprised, in fact, that I deleted my Spotify and Rdio apps, retaining only paid subscriptions to JAZZRADIO.com, Pandora and my local PBS jazz/classical/rock stations.

If this service is evidence of what the Dr. Dre/Jimmy Iovine team can put together, I say Apple has made themselves one heckuva deal. The size of the Beats headphone display in Apple stores says to me that they already contribute a bunch to the Cupertino company's bottom line, and this business by itself would pay for the deal. Apple is essentially getting the talent and streaming contracts (which, I have read, are transferable) for free.

But the key to the deal is Iovine's dealmaking ability -- as can be seen from the fact that he will report to Eddie Cue. Iovine could help make Apple TV an over-the-top media machine that could generate 100 billion or more over the next give years.

That's may take, anyhow.

The are two company's that stare you in the face when selling high cost products to a lot of people and thats Apple and Beats.

I think they will do well together.

I'm on board for anything that can get Apple into the streaming business.

Honestly, I am not sure this is a good thing for Apple. I have considered all the angles, but I still don't like it very much. Not for my beloved Apple.