It’s official: Apple acquires Beats Music and Beats Electronics for $3 billion

Apple today announced it has agreed to acquire the subscription streaming music service Beats Music, and Beats Electronics, which makes Beats headphones, speakers and audio software. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.

“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO, in a statement. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”

“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine, in a statement. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”

Iovine has been at the forefront of innovation in the music industry for decades, and he has been an instrumental partner for Apple and iTunes for more than a decade. He has produced or collaborated with some of the most successful artists in the history of the iTunes Store, helping make it the world’s number one music retailer. Iovine and Dr. Dre are sound pioneers, artists and entrepreneurs.

Beats Music was developed by a team of people who have each spent their entire career in music and provides music fans with an incredible curated listening experience.

“Music is such an important part of Apple’s DNA and always will be,” said Eddy Cue, Apple’s senior vice president of Internet Software and Services, in a statement. “The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years.”

Beats headphones: Wildly overpriced garbage.
Beats headphones: Wildly overpriced garbage.
In just five years since launch, the Beats “b” has become the brand of choice in the music and sports worlds, and is the market leader in the premium-priced headphone market. Music superstars including Lady Gaga, Lil Wayne and Nicki Minaj have designed their own customized Beats headphones and speakers. Fashion designers and street artists such as Alexander Wang, Futura and Snarkitecture have collaborated on special limited products, while renowned athletes including LeBron James, Serena Williams and Neymar use Beats as a critical part of their training and game day process. Beats has quickly become part of pop culture in the US and with the acquisition the Beats product lineup will be offered in many more countries through the Apple Online Store, Apple’s retail stores and select Apple Authorized Resellers.

Subject to regulatory approvals, Apple expects the transaction to close in fiscal Q4.

Formally established in 2008 as the brainchild of legendary artist and producer Dr. Dre and Chairman of Interscope Geffen A&M Records Jimmy Iovine, Beats Electronics (Beats) comprises the Beats by Dr. Dre family of premium-priced consumer headphones, earphones, and speakers as well as patented Beats Audio software technology and streaming music subscription service Beats Music.

Beats Music is a subscription streaming music service that focuses on providing a personalized music experience for each user through a unique blend of digital innovation and musical passion. Programmed by a trusted team of well-respected music experts with over 300 years of experience across all genres, Beats Music strives to deliver the right music for any situation, any time, and any preference, personalized to your tastes. The result is an artist-friendly digital music service that does more than simply offer access to music, but one that establishes an emotional connection to it as well.

Source: Apple Inc.

MacDailyNews Take: Shittier, more unnatural-sounding headphones, we have not heard. Hopefully Beats Music, Iovine, and Dre are worth the purchase price.

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As MacDailyNews already posited, Walter Isaacson thinks maybe Jimmy Iovine will run Apple’s content business – May 20, 2014
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  1. We’re going to have to wait to see what this deal means to Apple but it sure is having people scratching their heads over this deal. And all this about a week before WWDC conference. CNBC is reporting that beats makes a nice profit on those headphone. It cost them about $14.00 to make yet the upper end units cost $450.

    Apple is lost, but they’re making money. Well, Dr Dre can now afford to buy himself a PHD and I mean buy. I think Jobs is right now negotiating in heaven to come back to earth so in 20 years he can reclaim his Apple.

      1. At those profit margins you can bet your dumb ass on it. What else to they offer? They just got into music streaming recently. Apple is beginning to act like Yahoo. This is all a distraction for next week.

        1. Dude, a $1 billion headphone business is a sprinkle on the enormous pie that is Apple, Inc. There is more to this deal than headphones and the number of Beats Music subscribers as of 5/28/2014.

            1. This is probably the weirdest decision of post-Jobs era. I can not justify buying super tiny subscription service that headphone business that Apple does not really need for $3 billion.

              In all of those years Apple could make purchases that make much more sense and still did not.

              And yes, those two co-founders do not worth the money either.

          1. “$1 billion headphone business is a sprinkle on the enormous pie that is Apple, Inc.”

            True, but I doubt the executive team has been losing sleep and putting everything else on hold for Beats. The cost of Beats is trivial at $3 Billion. Rumored revenue is $1 Billion, and may be much higher. The margin on those headphones is huge. But even at 50% margin and $1 Billion, that works out to an acquisition price to earnings of 6:1 as opposed to Apple’s current P:E ratio of 14.95:1.

            Meaning, assuming no growth in Beats headphones, the headphones unit pays for itself in roughly 6 years.

            This seems like a good deal if Apple can do something worthwhile with the music service and isn’t distracted by this acquisition at the cost of other projects.

      2. But Apple will still continue to market them no doubt. Let’s hope they improve them. Beats headphones though will be one Apple product I won’t buy, not when I have better and cheaper alternatives. They aren’t even comfortable to wear.

    1. So long as Apple keeps shattering profit and revenue records, and keeps pushing the industry forward with the environment and charitable causes, you’re gonna have to eat your words, son. 🙁

      1. Cook is Apple’s Ballmer, sure they will rake in money, until the public wisens up to the crap Apple is putting out. It is already happening, long time Apple product users are scratching their heads at the asinine leadership in charge at Apple now.

        1. That’s the conventional narrative, right? But this is, by and large, asinine leadership handpicked by Steve Jobs. I’d much rather bet on his vision of your lazy narrative.

        2. You really think the overwhelming majority of long time Apple users really care about the leadership of Cook, or in many cases have even heard of him? You really are a tosser aren’t you, a repetitive one at that. Most people who buy the products do so because they like and appreciate them not the politics of running the business. The overwhelming amount of critiques show the products to be best or close to best in class so if you know otherwise please supply some evidence beyond the budgie imitations.

  2. Remember how Beyonce releasing an album on iTunes was a huge hit?

    That’s gonna happen again, and again, and again. This deal is brilliant, for a multitude of reasons.

    1. Yeah, it is sad. If Steve could only have anticipated how incredibly stupid Cook would be, I’m sure anyone would have been a better choice for CEO. The freaking janitor could have done a better job.

      1. Good grief, you are such a clueless, pathetic, witless and tasteless human being. It must so incredibly sucks being you… The fact that you don’t have the slightest inkling that you a

          1. Oops, sorry, I didn’t realize you were twelve. Really, sorry about that, but seriously, this forum is no place for a foul-mouthed little parenting-failure like yourself. Shoo, get out of here and back on your x-box!

            1. AAPLy Yours,

              YOU call Joe a kid when it is you who resorts to name-calling and criticism for his opinion?! You do realize that Joe does have a right to his opinion regardless of you agreeing with it or not.

              Tell us why it is a good purchase instead of name calling and insults. If you do, I will more than happy to listen (in this case – read).

            2. I do understand people’s misgivings about this deal. But one item perplexes me…we know that Steve Jobs and Jimmy Iovine hung out together, were friends, talked business. Could Steve himself have done this deal? It seems plausible.

      2. Good grief, you are such a clueless, pathetic, witless and tasteless human being. It must so incredibly suck being you… The fact that you don’t have the slightest inkling that you appear as an ever great fool every time you open your mouth makes you even more pathetic. Dam, I went from despising you to pitying you in 2 sentences… You are such a wreck …

      3. If an insipid turd like you ran Apple, they’d be closing their doors within the year. Shut up, you pathetic little troll, and go back to eating Cheetos in your mommy’s attic. “Mah! Where’s the meatloaf!?”


        1. Apologists like you won’t know what hit you until the stock craters. You’ll get what you deserve if you stupidly think Cook is doing a good job. Keep following the herd, it will take you right off the cliff like the rest of the lemmings who can’t see the writing on the wall.

            1. Do everyone a favor, and stop apologizing for horrible management. Steve wouldn’t have tolerated this. Cook and Ive would have and should be both gone.

            2. The problem with your statement originates with this “Steve wouldn’t….”

              You should go write a blog – because in order to say anything that starts with “Steve wouldn’t…” you must be a close personal family friend.

  3. LOL…I just barfed! What a waste of money. Should have spent that for building better products with kick butt materials and design. Instead 3Billion on this???

        1. Y’know I have a feeling that if someone were to give you the choice between selling flavored water for the rest of your life or changing the world, you’d choose the flavored water.

          … Which actually would be a good thing for the guy making the offer, considering you’re a visionless hack, a troll, and an idiot.

        2. And with all the posts you’ve made here so far… it sounds like you may have lost your diaper and can’t control all the crap you’re leaving behind.

  4. Beats deal will pay for itself in two years just based on it’s current earnings from fashionable headphones sales.

    The deal will cost leas than $2B since it will be payed in part from Irland based revenues.

    Apple will accuire a streaming service administration and company complete with subscribers, in a box ready to roll enhance and Applefy to the next level .

    The headphones will evolve into greatly enhnced Apple quality headphone of a new breed

    The Beat goes on to Apple’s tune!

  5. 3.2B – 3.0B = 0.2B = 0.2 * 1000,000,000 = 200,000,000

    This is probably Dr. Dre’s penalty for running his mouf and almost scotching the deal: Two Hundred Million Bucks. That’ll larn ‘im.

      1. skeptical: Please watch Dr. Dre’s video again and tell me that isn’t the manic rant of an immature, obscene child.

        How Hannah’s and my observations equate to ‘hate’ is incomprehensible. The guy seriously needs some personal discipline and maturity. That’s obvious. Deal with the situation.

  6. It sounds like Beats will continue as it’s own brand. This might be the beginning of Apple the conglomerate and there could be additional fashion/culturally oriented acquisitions brought into the fold. Today Intel revealed a smart shirt at Re/code. I believe Apple is working on similar technology and will either partner with or purchase additional fashion-based companies. Beats is the start of a new chapter.

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