Apple paid over $2.5 billion for Beats Electronics, slightly less than $500 million for Beats Music

Details of the Apple acquisition of Beats are shedding a bit more light on where the value is coming from, indicating that the streaming music portion of the company is worth just shy of $500 million. That places the value of the Beats Electronics business at $2.5 billion, which in itself had nearly $1.5 billion in revenue in 2013.

Saying that the Beats streaming service is worth even $500 million is a bit ambitious, though, as it was revealed during the acquisition that it has only 250,000 subscribers, making each customer worth a whopping $2000. By contrast, Spotify has 10 million subscribers paying roughly the same $10 per month subscription fee and is valued at $4 billion — $400 per subscriber.

Even with the favorable split giving the streaming service a high valuation, you can see that the Beats Electronic side of the business is the real breadwinner in the deal. Whether Apple really did just want Jimmy Iovine and Dr. Dre on-board with the executive team, this can still be a money-generating investment, all things considered.

Source: WSJ

Andrew Martonik

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