70% chance Apple’s Beats deal is happening and, if so, it’s a Dr. Dre, Jimmy Iovine acquihire, says source

“A well-placed source has confirmed rumors that Apple’s acquisition of Beats ‘is happening’ but was close to falling apart multiple times,” John Biggs reports for TechCrunch. “The source said with ‘70% certainty’ that Apple’s planned multi-billion acquisition of headphone maker Beats will go through. But Apple isn’t buying Beats for the technology, they’re buying the talent.”

“‘They want Jimmy and they want Dre,’ said the source. ‘He’s got fashion and culture completely locked up,’ Biggs reports. “While reviews of Beats hardware have been mixed, the company is valuable for the ‘record-label-in-a-box’ the Iovine and Dre relationship affords.”

“Iovine is known as a pit bull in the realm of media negotiations and this move will give Apple youth cachet thanks to the brand and business chops with the Iovine/Dre mix,” Biggs reports. “Iovine will be most valuable in negotiations with record labels in iTunes acquisitions. The move, it seems, is far more than just a hardware acquisition.”

Read more in the full article here.

MacDailyNews Take: As we wrote 10 days ago:

It’s very likely that this Beats deal is simply that Jimmy Iovine is like Steve Jobs in one way, at least, in that he has the ability to sell ice to Eskimos, and Cook realizes that Eddy Cue without Steve Jobs is failing to seal the types of deals that Apple needs sealed.

iTunes Radio isn’t as good as it should be (plus it’s unnecessarily hidden – within iTunes on the desktop, especially), a subscription option would certainly be welcome, and the work for Apple’s next-gen TV product is pretty much done, according to our sources, but lacks the necessary content deals for launch. As senior vice president of Internet Software and Services, Cue is responsible for these things. Perhaps Cook’s intention is that those types of initiatives will now fall to Iovine to make happen correctly and promptly.

We’re not going to say that we expect Cue to retire sooner than later, but we wouldn’t be the least bit surprised if he did, especially if this Beats deal gets consummated.MacDailyNews, May 12, 2014

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54 Comments

  1. Bullshit. Apple only paid around $400M for the Next/Steve Jobs “acquihire” in the late 1990s and the primary objective was to obtain the Next OS to create Mac OS X.

    Even *if* Apple intends to acquire Beats, the purchase price will not be significantly driven by Apple’s alleged desire to hire Dr. Dre and Jimmy Iovine. Apple could work out some kind of employment/consulting deal without buying Beats and without spending north of $3B.

    1. Well, my original take (which has yet to be proven wrong) is that Apple is not (and should not) acquire Beats at all, especially for $3.2B.

      *If* Apple actually does acquire Beats, the majority seem to believe that the primary value is in their streaming music service. Some people believe that their headphones and such are worth some money. Biggs seems to believe that Dr. Dre and Jimmy Iovine are major drivers behind an alleged $3.2B acquisition on the part of Apple. That’s what I am saying is BS.

      Apple may be interested in employing Dre and Iovine, but that is not driving the price of this alleged acquisition. If Apple is buying Beats for $3.2B (or any price), then it the price is based primarily on business reasons and not on a couple of people who may or may not be interested in working for Apple at all.

      1. Iovine is like Jobs. He likely said, “the only way you get me if if you take Beats off my hands.”

        That’s why MDN is right and you’re wrong.

      2. “I have my own theory about why the decline happens at companies like IBM or Microsoft. The company does a great job, innovates and becomes a monopoly or close to it in some field, and then the quality of the product becomes less important. The product starts valuing the great salesmen, because they’re the ones who can move the needle on revenues, not the product engineers and designers. So the salespeople end up running the company.”

        Steve Jobs

  2. I would just be happy if they would rework the dog’s breakfast interface that is iTunes.
    I would pay $20 for an interface that is simple, easy to understand. The present one is fine for those who are so totally obsessed with having music in their ears at least 24 hours a day that they can take the time to manage the dozens of sorting variables that seem to be changed every 6 months.

    How about an app that does nothing more than allow me to drag and drop from one music list directly onto my iOS device. Call it iTunes Lite or something and I dont even mind paying for it if it will save me some time compared to the present one. I don’t need to sort my music 87 different ways. I am not that obsessed with the need to sort it by Genre, yada yada yada. I have a life.

    Some of of the students in the high school where I work remind me of an old lady who cannot function without their oxygen tank. No disrespect to them, they have an actual need, not an irrational want. Let the flames begin.

      1. For the most part I don’t have a problem with iTunes, even though I see areas where it could be improved.

        But is it really fair to say it’s just “user error” if someone has a difficult time with the interface? After all, that’s what the DOS/Windows crowd used to say about those who didn’t like the command line user interface (“You just don’t know what you’re doing”) or the 10 sub-menus you had to navigate in Windows to find he command you wanted (“You must be an amateur if you can’t find that command”).

        You and I may be able to navigate iTunes just fine. But we, and Apple, should listen to and respect the opinions if those who don’t find it so easy or straight forward to use. While it’s better than it’s ever been, iTunes has a lot of room to grow and improve. Apple should not sit on their laurels and do nothing. They would be wise to continue working hard to improve the user experience. If they don’t, someone else will eventually.

  3. I hope it falls through. Apple needs to forget about music. Apple will NEVER… That’s right… I said NEVER dominate streaming like they do downloads. And who cares? As long as people use spotify and Pandora on their iDevice. Apple just needs to stay the course and let the others duke it out. There isn’t much money in music anyway; it was always just a way to get people to buy the hardware. Apple should focus on Video content. Apple should buy Direct TV, sell dishless TV subscription ala carte, and fight like hell for net neutrality!

          1. I went on to say “stay the course.” However, you said “multimillion” Which is true. When they pay the music label and expense the data centers they make a few pennies for every dollar of revenue. iTunes content is BY FAR their lowest margin business.

  4. If this deal does not happen by WWDC look for some significant fallout. The press builds it up, then has another story when it goes south. Iovine may have “fashion and culture completely locked up,” but whether he and Dre can integrate with the quite culture-driven Apple, remains to be seen. 3.2B for street cred and Beats seems way out of line. Unless there’s something that only Apple knows, that 70% chance of a deal seems way too optimistic.

    1. Fashion and culture tend to be fleeting things, and a company generally has great difficulty “buying in” to either. Street cred is not “transferrable.” You can’t buy it and you can’t hire it. If Apple does buy Beats, then I will have to assume that they identified a solid business case. But Apple does not chase fashion and culture – Apple creates them.

            1. When I was younger, so much younger than today
              I never needed anybody’s help in any way
              But now those times are gone, I’m not so self-assured
              Now I find, I’ve changed my mind, I’ve opened up the doors

            2. I used to think of no one else
              But you were just the same
              You didn’t even think of me
              As someone with a name
              Did you mean to break my heart and watch me die?
              Tell me why

            3. This is the end, beautiful friend
              This is the end, my only friend, the end
              Of our elaborate plans, the end
              Of everything that stands, the end
              No safety or surprise, the end
              I’ll never look into your eyes, again

  5. Wasn’t the deal supposed to be finalized already?

    I feel this is another example of the death of an actual press.
    Journalism is dead and gone, now it’s a bunch of lazy rumor mongers.

    1. By that standard, “breaking news”-style journalism has been dead for over a century. Newspapers which declared Titanic afloat and all aboard were safe are just one example where the press published before even the most basic facts were known.

  6. Buying Beats won’t guarantee Iovine and Dre will remain on Apple’s payroll unless the deal payment is doled out over years, much like Tim’s shares are being doled out.

    Perhaps some amount of cash/shares for the basic company, and then shares that vest over the next 5-10 years for the rest of the deal. In short, make Iovine/Dre earn their money, with an incentive to remain at Apple, if that’s truly what Apple is buying. An up front payment of $3.2b for a company evaluated at $800m last fall is sure to encourage them to walk away after the money exchanges hands.

    1. Agreed.
      And a substantial case for the deal would be a good start.

      SJ was working for $1.

      If these guys are so great they should be paid on the basis of delivery – hip hop isn’t a 20 million a year subscriber deal for a worldwide audience – its very US centric.

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