“The iPod and iPhone maker is expected to announce as early as this week a $3.2 billion agreement to buy Beats Electronics, the music streaming service and headphone maker founded by legendary music producer Jimmy Iovine and rapper Dr Dre, according to three sources familiar with Apple’s thinking,” Christina Farr, Ronald Grover and Lisa Richwine report for Reuters. “The deal would come after Pandora Media Inc and Spotify have already claimed the vanguard of the music streaming revolution, while Apple’s riposte – the eight-month-old iTunes Radio – is stumbling.”
“‘Apple is about two years late, behind Spotify,’ said David Pakman, a digital music investor with Venrock Capital and a co-creator of Apple’s Music Group. ‘They need a streaming offering,'” Farr, Grover and Richwine report. “With digital music downloads in decline, record labels have put pressure on Apple to get its act together on streaming, according to two of the three sources. The record labels hope Apple can turn Beats Music into a strong competitor with Spotify and other streaming services, the sources said.”
“In recent months, the major labels had grown dissatisfied with the performance of iTunes Radio, the source said. Streaming subscriptions are now the fastest-growing revenue source for the music industry, but Apple has not made a dent,” Farr, Grover and Richwine report. “‘ITunes is the number one for digital downloads,’ said Daniel Weisman, a manager at Roc Nation who represents bands. ‘If iTunes can flip the switch on their user base to become streaming subscribers, that will be a huge win for everyone.’ A source at a music publisher said the labels like Beats because it was ‘created from within the music industry.’ Getting Iovine on board will give Apple huge leverage across the negotiating table as streaming develops.”
Read more in the full article here.
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