“Apple Inc is close to paying a record $3.2 billion for Beats Electronics, two people with knowledge of the matter said, an expensive foray into music streaming and headphone gear that would mark a departure for the usually cash-conservative iPhone maker,” Nadia Damouni, Christina Farr and Nicola Leske report for Reuters. “Both companies are hashing out details and the envisioned deal could still fall through, one person told Reuters on condition of anonymity because the discussions were private.”
“A second source familiar with the matter told Reuters that Apple was in the market for a subscription-based music service to complement its ‘iRadio’ ad-based offering, launched in 2013 as part of an attempt to jump into a music-streaming arena then split between a handful of startups such as Pandora Inc.,” Damouni, Farr and Leske report. “Founded by rapper Dr. Dre and legendary music producer Jimmy Iovine, Beats Electronics is best known for its ‘Beats by Dr Dre’ line of trendy headphones that vie with the likes of Skullcandy Inc, Sennheiser Electronic and Bose Corp. This year, it launched a music service that has won plaudits for its slick design and human music curation, versus the computer-algorithms that determine playlists for most of its rivals.”
“But analysts on Thursday questioned whether Beats, valued at just $1 billion during its last funding round in September, was worth that price,” Damouni, Farr and Leske report. “Apple-watchers have speculated that the company that upended the music industry – and today is the single largest seller of tunes – was contemplating a Spotify-like on-demand music service to go with iRadio service and iTunes. ‘This is really puzzling,’ said Forrester analyst James McQuivey, who said there was huge overlap between the two companies’ customer base. ‘You buy companies today to get technologies that no one else … or customers that no one has. They must have something hidden … under the hood.’
Damouni, Farr and Leske report, “Apple’s Chief Executive Tim Cook met with Iovine, the Beats CEO, last year on a potential partnership involving Beats’s planned music-streaming service, Reuters reported in March, citing sources.”
Read more in the full article here.
MacDailyNews Take: This thing is getting more real with each passing second.
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What if… Apple wants to market its total music business under a separate brand…. So iTunes, iTunes Radio, maybe even iPods and music related accessories. Just a thought.
Intriguing idea.
Think Different…
When has Cook ever done that? He’s blowing money everywhere except where Apple needs to improve:
1) new Apple TV
2) new iPhones
3) new Mac Mini, displays, etc
4) all-Retina MacBook lineup
5) software updates across the board
6) etc….
Nobody — NOBODY but Cook — believes Iovine and Dre are worth $3.2 billion. HTC spent $300 million for a half share of Beats in 2011 and how did it turn out for them??? Might as well have burned the money.
If these headphones continue to sell at their current rate, the deal will pay for itself in profits in 2-3 years, the recognized fashion item , streaming service and everything else will be free, Apple will improve and outfit them with proprietary tech that will instantly grow their fashion appeal and belong to Apple …
Apple has plenty of money to burn and this is known to be very contemplated and thrifty, Everybody knows that and the Nobody is not Everybody – ‘mike’
If these headphones continue to sell at their current rate, the deal will pay for itself in profits in 2-3 years, they are obviously a recognized sought fashion item… streaming service and everything else will be free.
Apple will improve and outfit them with proprietary tech that will instantly grow their established fashion appeal and belong to Apple for future development and implementation of …
Apple has plenty of money to burn and is known to be very contemplated and thrifty.
Everybody knows that and ‘Nobody’ is not Everybody – ‘mike’
You already said that dopey. And it didn’t make any sense the first time.
Apple spends far too much time negotiating rights (streaming, publishing etc..) with suspicious, unwilling now hostile and reluctant music labels and media kings. The groundwork and agreements for these have already more than established by Beats and Iovine…
Apple gains a digital streaming and experienced licensing team to manage and develop it’s interests, present and future, in this arena, which is tantamount to building a new division without the need for building a foundation, which would probably cost as much if not more and take a valuable time…
That is thinking different.