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Apple: “We’re Buying Beats for $3 Billion”

Photo May 28, 2 11 33 PM

The news of Apple’s Beats acquisition has been circulating for about a month. The word was unofficial, and many naysayers were hoping that Apple would back out before it became official.

Well, Apple has just announced that they’re buying Beats Electronics and Beats Music for $3 billion.

$2.6 billion will be paid now, and $400 million will “vest over time”.

Jimmy Iovine and Dr. Dre will join Apple’s management.

Iovine says:

“I’ve always known in my heart that Beats belonged with Apple… 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.”

Apple will sell beats online and in stores, expanding the brand to more countries.

Beats’ brand and products have long been designed by Robert Brunner and Ammunition Group. Now, Apple will take over design duties.

Apple expects the deal to close by the end of the fourth fiscal quarter, which ends in September.

When Beats Electronics was first taking off they almost partnered with Apple for distribution. Beats ended up partnering with Monster.

 

Nina Ulloa covers breaking news, tech, and more. Follow her on Twitter: @nine_u

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Comments (24)
  1. Frank

    Does the deal include Rocawear?


    Reply
    1. Nina Ulloa

      that’s like asking if facebook’s acquisition of whatsapp included american apparel


      Reply
  2. Willis

    Apple stock is down after this announcement. Consider this the first day of the downward spiral for Apple.


    Reply
    1. Anon

      Really? This is an interesting deal and may not generate the expected ROI, but Beats is still a successful company that will generate a lot of revenue for Apple.


      Reply
      1. Anonymous

        But they are way overpaying for Beats. The headphones have more than likely already peaked in popularity and the subscription service is rumored to have even less paying subscribers than DMN reported earlier and is extremely underdeveloped. The press might be going crazy about Apple bringing in Iovine and Dre, but what are they really bringing to Apple that Apple can’t get on their own for a lot less money? People like to talk about all these connections in the music industry that Iovine has, forgetting that they are talking about Apple, not some little obscure company just starting up. Dre is supposed to be connected to consumers and understand what the market wants, but again this is Apple.

        Investors have few reasons to pleased about this.


        Reply
      2. Willis

        They’ll use the music service to bolster iTunes, but the physical product line needs help. It’s a lifestyle play that is on the downside of the hill. Beats headphones were a fad that had a good run. They are now considered played out by the demographic that supposed the sales.


        Reply
    2. random

      Whatchu talkin about Willis?


      Reply
  3. Bill Rosenblatt

    I think the question is whether Apple will a) leave Beats Music as is, b) neuter it by making it the umpteenth bullet-list feature of iTunes, or c) take it out back and shoot it as they did with LaLa.

    Beats Music is not a mass market product; it’s a service by music geeks for music geeks. Being a music geek myself (and a fan of Beats Music), I’m wishing for a) but not betting on it. Instead, I’m betting that they use the infrastructure to bury interactive streaming within iTunes bloatware (think iTunes Radio) while concentrating on the Beats consumer electronics lines, which is where the real money is by orders of magnitude. I think the press is generally overestimating Beats Music’s impact on this deal compared with the headphones and Bluetooth speakers.


    Reply
    1. IndieSongADay

      As a fellow music geek, I’m rather disappointed with Beats Music. I’ve yet to see how it’s that much different than Spotify. More thoughts on this here…


      Reply
      1. Bill Rosenblatt

        I don’t disagree. The curation is a nice idea but it doesn’t scale. I’ve been using the service for several months now, and too often I see the same old same old things on the “Just for You” screen. I still prefer it over Spotify, but it’s in danger of getting a little tired.


        Reply
  4. Anonymous

    Here’s what I need to know:

    Will Apple/Beats force artists to stream the songs we sell at iTunes? That would be the end of my relationship with iTunes.

    I’m a huge Apple fan but the more I look at the company these days, the more YouTube looks like the future.


    Reply
    1. Annonymouse

      Nope they won’t.


      Reply
      1. Anonymous

        Documentation, please.


        Reply
  5. Anonymous

    SFX: Ringing of churchbells
    Camera: Panning over lowering of coffin full of downloads.
    Cut to: Wild Party scene at Spotify offices.


    Reply
    1. Anonymous

      I doubt they’re celebrating much @ Spotify — Iovine told New York Times today that Spotify’s business model just doesn’t work.

      Spotify should have 10m people in America alone,” he said.

      And he’s right, you know…


      Reply
  6. Kevin Rivers

    This is the best news I’ve heard all week! Great work Apple! :-)

    Kevin Rivers
    CEO, Venzo (Your music + music videos on iTunes for free!)
    http://www.venzodigital.com


    Reply
  7. Bill Rosenblatt

    I think the question is whether Apple will a) leave Beats Music as is, b) neuter it by making it the umpteenth bullet-list feature of iTunes, or c) take it out back and shoot it as they did with LaLa a few years ago.

    Beats Music is not a mass market product; it’s a service by music geeks for music geeks. Being a music geek myself (and a fan of Beats Music), I’m wishing for a) but not betting on it. Instead, I’m betting that they use the infrastructure to bury interactive streaming within iTunes bloatware (think iTunes Radio) while concentrating on the Beats consumer electronics lines, which is where the real money is, by orders of magnitude. I think the press is generally overestimating Beats Music’s impact on this deal compared with the headphones and Bluetooth speakers.


    Reply
    1. Anonymous

      “take it out back and shoot it”

      They might as well. :)

      But they don’t care about Beats. They bought Iovine & Dre for the same reason they bought a lot of other smart guys:

      They can’t invent stuff anymore so they hope to find another Jobs who can save them again.


      Reply
  8. Zog

    The music business needs someone to fix the problems, developing streaming and being able to work with the artist, record labels, publishers ect will be a plus for Apple and the industry with the Beats acquisition . Now if we can only get down on a level playing field, paying artist what they fairly deserve to be payed and get people back to supporting and buying music this will be a successful ROI.


    Reply
    1. Anonymous

      “The music business needs someone to fix the problems”

      Apple hasn’t fixed anything since Jobs. They’re good guys, I love them, and it’s sweet to see they still care so much about music.

      But everything’s about YouTube Music now.


      Reply
  9. FarePlay

    “What happens to iTunes and the future of paid downloads? For the first time since Apple introduced the iTunes store ten years ago, digital download sales of music are down; a trend many predict will continue as interactive streaming services gain traction in the marketplace.

    So how does Apple protect its’ profitable itunes business while building a franchise in music streaming? It would be foolish to simply let their iTunes business fade away, especially in exchange for a start-up in an industry that has shown no earnings upside.

    There is no question that Jimmy Iovine brings tremendous value to the deal. He’s an industry maverick that knows who to call to get exclusive deals with the top artists for Beats Music and iTunes.

    In a world where interactive music streaming will play an increasingly larger role in music consumption, this alliance may hold out the best hope for musicians and songwriters. It will require that all parties work together to figure out how Beats Music and iTunes can work in tandem to drive business to each other.”

    Beats Music and iTunes: Apple At The Crossroads.
    http://www.huffingtonpost.com/william-buckley-jr/beats-music-itunes-apple-_b_5351825.html


    Reply
  10. Spoken X Digital Media Group

    ‘ Platinum Terror Star ‘ just went live in 53 countries infiltrating international mobile phone networks inside of a non exclusive revenue sharing circumstance of a $0.00 dollar blank check distribution deal.


    Reply
  11. Helen

    TIME TO SELL YOUR AAPL STOCK!!!


    Reply
  12. Helen

    Eddy Cue and Tim Cooked are really f-ing everything up. Apparently Eddy instigated the deal which was perhaps provoked by Bob Lefsetz’s April fools joke. Apple has admitted to their failure to continue to innovate by making this move, and this longtime Apple lover wants out. Now.


    Reply

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