Beats Acquired by Apple for $3 Billion - The UpStream

Beats Acquired by Apple for $3 Billion

posted Friday May 30, 2014 by Nicholas DiMeo

Beats Acquired by Apple for $3 Billion

After about two weeks of rumors, the news officially dropped this week. Apple has acquired Beats Music and Beats Electronics to the tune of $3 billion. Both co-founders of Beats, actor, six-time Grammy Award-winning rapper, producer and all-around hip hop mogul Dr. Dre, and CEO of Interscope Geffen Jimmy Iovine, will move over to Apple. The cash breaks down at $2.6 billion upfront and $400 million paid over time, making Dr. Dre hip hop's first billionaire.

Beats brings a lot of property over to Apple in this move, and even though people recognize their highly-advertised Beats headphones as the flagship seller, Apple's acquisition of the company was definitely for other products. Beats Music, the up-and-coming music-streaming service, recently launched and has already gained 500,000 subscribers, largely in part to its name and its special offerings with AT&T. And, more importantly, the Beats Audio hardware technology, which provides unmatched 24-bit sound quality for both playback and recording in computers, will likely find its way into Apple computers in the future.

This is certainly a fitting move for Apple, a company that's rested its laurels on simply buying technology that it cannot create or sustain itself. Picking up a superior audio technology and a music-streaming service that iTunes Radio wishes it could be would seemingly complete the perplexing puzzle that is Apple's place in the music space beyond iTunes.

Apple CEO Tim Cook so eloquently explains that in his statement regarding the acquisition.

Music is such an important part of all of our lives and holds a special place within our hearts at Apple. 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.

For Jimmy Iovine, he will leave his role as CEO of Interscope Geffen and take on a position in Apple. His story is really an interesting one as he started his career cleaning floors in New York City recording studios. Before taking over as a media icon for one of the largest labels in the music industry, Iovine was seen as a production visionary, creating music with legends such as John Lennon, Bruce Springsteen and Stevie Nicks. Most are also unaware that Iovine was one of the first people to see iTunes and that he had a hand in shifting the culture of the industry into buying single songs digitally.

And of course, we can't forget about Monster, the company that started the relationship with Iovine, Dre and Beats and initially came up with the concept to introduce a high-end music listening experience to the masses. You can say what you will about the company's cable (of which I will personally and factually refute to no end) but Monster's headphones are miles above the rest in terms of true, intended sound. I reached out to CEO of Monster Noel Lee for a statement on the acquisition of his brainchild.

Wow, a 3 billion dollar deal for Beats is an incredible achievement for Jimmy and Dre. We are glad to see that the company that we started together would turn into a Monster. The size of this investment shows what can be possible with Monster with our own new technologies in the headphone and speaker space. We look forward to our future collaborations that opens our eyes to how companies like ours can be valued as a part of youth and music culture. It will be exciting to see how this marriage will explode the portable music category once again. Monster will indeed play an important role for bringing incredible music experiences to consumers, as it did when Monster created Beats.

The future is bright for music, streaming or otherwise. I want to thank Jimmy and Dre for pioneering the way in marketing and Beats Music, and putting a spotlight to the value of companies in our space.

I can attest to the power of Beats Audio hardware technology in both laptops and mobile devices and I am honestly curious as to how Apple will handle its implementation into a possible MacBook or iPhone. I wonder how HTC is handling all of this, considering the company sold back its $150 million investment in Beats after just a year. Granted, they made back double of what they put in, but it's not a part of the $3 billion pie.


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