Apple CEO Cook: Beats deal a ‘no-brainer’

“Apple, the company that turned digital music into a mainstream phenomenon, said on Wednesday that it was buying Beats Electronics, the rising music brand, for $3 billion, in a move that will help it play catch-up with rivals that offer subscription-based music services,” Brian X. Chen reports for The New York Times. “Apple and Beats executives on Wednesday said that the companies would work together to give consumers worldwide more options to listen to music. The Beats brand will remain separate from Apple’s, and Apple will offer both Beats’s streaming music service and premium headphones.”

“Apple said that iTunes, which sells individual songs and albums and offers a streaming radio service, would continue to be offered alongside the Beats music service,” Chen reports. “The purchase of Beats brings Jimmy Iovine, a longtime music executive, and Dr. Dre, the rapper, to work under Eddy Cue, Apple’s executive in charge of Internet services.”

“In an interview here at Apple’s headquarters, Timothy D. Cook, Apple’s chief executive, repeatedly emphasized the talent that Dr. Dre and Mr. Iovine would bring to Apple. He also praised the Beats music service, which has people create playlists for people to listen to. ‘These guys are really unique,’ Mr. Cook said. ‘It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find,'” Chen reports. “Until now, Apple, the richest tech company in the world, has avoided billion-dollar takeovers in favor of smaller deals. The Beats deal is its largest ever.”

Chen reports, “Mr. Cook called the deal a ‘no-brainer.’ He said that Apple had bought 27 companies since last year, but that did not mean Apple had to buy those companies. ‘Could Eddy’s team have built a subscription service? Of course,’ he said. ‘We could’ve built those 27 other things ourselves, too. You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service.'”

MacDailyNews Take: Uh, the last thing “Eddy’s team” built was iTunes Radio which is, to be charitable, a work in progress.

Chen reports, “Steven Milunovich, a financial analyst for UBS, said he thought the bulk of the acquisition might have been spent on hiring Mr. Iovine to handle big media negotiations in the future, as Mr. Jobs did for iTunes music in the past. ‘Jobs had a distortion field and that was kind of a unique capability,” Mr. Milunovich said. He added about Mr. Iovine: “Within the music world, this guy’s probably the closest thing you’re going to get to it.'”

Read more in the full article here.

MacDailyNews Take:

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.MacDailyNews, May 12, 2014

“‘It’s all about music,’ Mr Cook told the FT at an interview in the company’s Cupertino headquarters, adding that Beats co-founders Jimmy Iovine, the music producer, and Dr Dre, the hip-hop legend were ‘kindred spirits.’ Mr Iovine and Dr Dre will join Apple as part of the deal,” Matthew Garrahan and Tim Bradshaw report for The Financial Times. “‘We’ve known them a long time,’ Mr Cook said. ‘We’ve gone from dating to going steady… now we’re getting married.'”

With the acquisition, “‘We’ve got a streaming service that we believe is the first to get it right,’ Mr Cook told the FT. ‘They had the insight that human curation was very important… we think they’ve done an A plus job,'” Garrahan and Bradshaw report. “Beats was superior to rival streaming services, he added. ‘Some of them are no more than a random set of songs put together.'”

“Mr Iovine said Beats Music would be enhanced and improved by the tie-up with Apple. ‘It’s only 20 per cent of what we want it to be. How do we get it to the quality we want? That’s Apple,'” Garrahan and Bradshaw report. “It is the most significant platform transformation that we have had for 30 years, said Lucian Grainge, chairman and chief executive of Universal Music Group, the world’s largest music company. Subscription streaming generates ‘high quality, recurring income,’ he added. Will.i.am, the recording artist and entrepreneur, told the FT the deal was ‘transformational… it redefines our industry.’ … Said Doug Morris, chairman and chief executive of Sony Music. ‘This deal is a great thing for the record industry and it will turn out to be amazing for Apple.'”

Read more in the full article here.

Related articles:
Tim Cook’s internal memo to Apple employees regarding Beats acquisition – May 28, 2014
It’s official: Apple acquires Beats Music and Beats Electronics for $3 billion – May 28, 2014
Apple reportedly cuts $200 million off Beats purchase price – May 28, 2014
Why the Apple-Beats deal may be dead – May 27, 2014
Has Dr. Dre’s drunken boast cost his company $3.2 billion? – May 24, 2014
Apple might buy Beats Electronics with foreign cash, effectively paying much less than $3.2 billion – May 23, 2014
70% chance Apple’s Beats deal is happening and, if so, it’s a Dr. Dre, Jimmy Iovine acquihire, says source – May 22, 2014
As MacDailyNews already posited, Walter Isaacson thinks maybe Jimmy Iovine will run Apple’s content business – May 20, 2014
Apple strikes a new chord in the future of music with Beats acquisition – May 18, 2014
How Tim Cook buying Beats is like Steve Jobs buying SoundJam – May 18, 2014
Apple’s $3.2 billion Beats acquisition may not be finalized until next week – May 15, 2014
Monster CEO sounds a little bitter over Apple’s planned $3.2 billion Beats acquisition – May 14, 2014
Ben Thompson on possible Beats buy: Is Apple losing what makes Apple, Apple? – May 13, 2014
Nolan Bushnell: Beats is a ‘good deal for Apple,’ but it says Apple is ‘not an innovative tech company’ – May 13, 2014
Curated music influencing Apple’s jump into streaming – May 13, 2014
Beats Music is actually so good that I’m worried about Apple ruining it – May 13, 2014
Apple could become most powerful record label in the world with Dr Dre, Jimmy Iovine onboard – May 13, 2014
Bob Lefsetz on Apple-Beats deal: Tim Cook is an operations guy, he’s clueless, and the company has no vision</a – May 13, 2014
Apple CEO Tim Cook makes break from managerial style of Steve Jobs – May 12, 2014
Analyst Sacconaghi on Apple buying Beats: ‘We struggle with the rationale for this deal’ – May 12, 2014
Cody Willard: Apple’s Beats buy is just stupid
– May 12, 2014
Apple may unveil Jimmy Iovine, Dr. Dre executive appointments at WWDC – May 12, 2014
Apple CEO Tim Cook’s pursuit of Beats seen presaging more takeovers – May 12, 2014
Former eMusic CEO explains why Apple wants to buy Beats – May 12, 2014
Apple’s deep ties with Jimmy Iovine key driver of Beats deal – May 12, 2014
Removal of Dr. Dre video about Apple-Beats deal likely means acquisition is real and imminent – May 10, 2014
Dr. Dre boasts of Apple-Beats deal in YouTube video, on Facebook – May 9, 2014
Game changer: Apple buying Beats could radically transform the digital music business – May 9, 2014
If Beats deal happens, Apple is acquiring a fad, not quality, and that is troubling – May 9, 2014
If Apple’s really buying Beats, here’s hoping it’s brilliant in a way which isn’t immediately obvious – May 9, 2014
The reason for Apple’s $3.2 billion interest in Beats? Spotify – May 9, 2014
Apple buying Beats Electronics: Its best idea since the iPad? – May 9, 2014
Why would Apple want to blow $3.2 billion on Beats Electronics? – May 8, 2014
Apple in talks to buy Beats Electronics for $3.2 billion – May 8, 2014

37 Comments

  1. There is a really big deal here. Apple has gone out and bought another Brand label for some serious change.

    When has Apple ever owned another major Brand trading under its own name? I can’t think of one.

    Apple has always developed and sold Apple products ( excluding those through iTunes and the like where they are making ‘service charges’)

  2. The Problems Have Started Already

    I just found this article over at Ars Technica. I am not pleased:


    Beats co-founder badmouths Spotify, EarPods in first post-Apple interview

    Beats’ Jimmy Iovine: Apple’s EarPods are made to “see if the sound works.”

    My comment at Ars Technica:

    “He spent some time criticizing his new employer’s default headphones as well, saying that Apple’s EarPods were headphones that you should use “to see if the sound works.””

    This comment is worthless. I have on a pair right now and can easily point out that they’ve better than anything Apple previously provided and better than anything similar from Sony. I can also point out that stupid comments like this from someone who is now working within Apple are entirely unacceptable as well as self-destructive of the company and their personal reputation. I’d go so far as to call Iovine asinine for making the comment.

    This bodes poorly for the ‘marriage’ of Apple and Beats. We already know the immaturity and obscenity of Dr. Dre. It’s deeply disappointing to hear similarly unprofessional and irresponsible garbage from Iovine.

    $3 billion for this. I suspect an annulment is in order.

    1. What every shareholder should want. A way for Apple to continue to make money in music. If there was a reason that Apple didn’t have a streaming service it was because Steve though it was shit. I think Cook gets a pass this time. Up until a week ago hardly anyone knew that Beats had a music service. Now they have had lots of money in free advertising. But that’s just Apple as always.

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