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.
What happens when a large company that owns the market doesn't get what they want? Someone is punished. That's exactly what happened when Amazon didn't get the price reduction they wanted in negotiations with Hachette, the smallest of the five main book publishers.
After negotiations broke down, Amazon made changes to Hachette's listings; prices went up, delivery time went up and the books stop being featured. This includes JK Rowling's new novel
The Silkworm, which has been completely removed from the site, as well as The Everything Store, which is a book about how Amazon does business.
Hachette is resisting Amazon's insistence that eBook prices be lower, an issue that once got
Apple and publishers sued for price fixing. Now, without the power of Apple's illegal union behind them, Hachette is seeing a lot of trouble fighting this battle.
Neither Amazon nor Hachette have commented publicly on what is going on, but it is very clear that the two companies' business models are at odds. This is the type of move from a company from like Amazon that leads to a new, emerging marketplace.
As Amazon has grown its businesses in AWS, Fire, etc., their perception in the shopping world has been declining quickly. Is it time for a new Amazon.com competitor? Is this move to punish one of the largest book publishers the one that makes it possible? Let us know your thoughts in the comments.
Whenever a story about Facebook comes up, you could probably guess it has a little bit of crazy in it. Things like spending over
half a billion dollars on a police station, buying Oculus VR for $2 billion and ruling the skies with solar-powered drones are all considered normal for Facebook's wallet as of late. But occasionally the company makes an interesting internal change or feature-add as well, and no, I'm not talking about the latest layout that you either love or hate. This time, Facebook is launching a way for your smartphone to hear you TV and post about the show you're watching.
Facebook took to its newsroom this week to announce a new way to share and discover music, TV and movies. If you're writing a status update, your smart device's microphone will be able to listen in on what song is playing through your speakers, or what show or movie is playing. This way, you can tell all your friends without ever having to move your thumbs. It's convenient but a little creepy at the same time. Luckily, Facebook has made this a completely optional feature.
Facebook Product Manager, Aryeh Selekman, posted on how it works:
If you've turned the feature on, you'll see an audio icon moving on the screen when you write a status update. If the feature finds a match, you can then choose to add the song, TV show or movie to your post.
Like with any post, you choose who can see it. You can also turn the feature off at any time by clicking the audio icon in the top right of the screen.
If you leave the feature on, you will see the audio icon move and attempt to detect a match when you're writing a status update. No sound is stored and you'll always get to choose whether you post to your friends.
Now, it is pretty cool that if you do decide to share music, a 30-second preview of the song will attach to your status update. And for shows, the season and episode will display so that your friends who haven't seen that episode yet don't have to click on the comments and have it ruined by spoilers.
Naturally, it will be available for Android and iOS users in the US in the next couple of weeks. Sadly, not for Windows Phone. I will say, it'd be kind of cool to share tracks with your friends, but I'm not sure if I'd want to leave this option on by default. Seems a little creepy and I'm not sure that many friends care that much about what content I'm watching at all times. Your mileage may vary.
Even with the Supreme Court currently
hearing a case involving Aereo, the controversial local market antenna-streaming service, the company has been full speed ahead when it comes to its offering. Currently, Aereo is offering a free 30-day trial of its premium services, which offer up access to a second antenna, allowing you to record two shows at once, and also gives you three times the DVR capacity from the basic package.
After the free 30 days are over, it's only $12 per month for access to all of these features on the upgraded plan. To compare, the basic package is only $8 per month and only comes with 20 hours of storage capacity. The premium plan has been around almost since inception of the company, but was never really promoted, as the company was trying to break into the markets with a sub-$10 per month option.
However, now with the option to try the features before you buy, more customers are apt to stick with the premium offering after the trial expires. This is especially true if they've gotten used to watch one show and recording one for later, or have saved up a bunch of broadcasts to watch later.
Even though Aereo has made enemies with almost all the cable companies and even some district courts, being banned in two cities, organizations like the Consumer Electronics Association have backed Aereo, citing the company's push through the mold with its innovative business model. CEO of CEA Gary Shapiro has gone on record to publically endorse Aereo's efforts and said that he hopes for the video-streaming service to come out on top in the Supreme Court. For those interested in Aereo, the company currently offers service in New York, Dallas, Houston, San Antonio, Austin, Cincinnati, Boston, Atlanta, Miami, Detroit and Baltimore. Aereo would have had
22 more markets launched by March, but legal battles are expensive.
Cable television is an interesting beast. Each content provider negotiates pricing with each cable provider on a regular basis. When a contract ends both groups sit down and discuss what new pricing should look like. From time to time these negotiations take longer than the expiration of the contract and you lose stations temporarily. Almost everybody has experienced stations like CBS or Fox disappearing from the cable provider for a few days.
In April a cable provider called Cable One was in negotiations with Viacom and had this situation arise. At the end of the contract no new deal had been reached and Viacom pulled its stations from Cable One. While this is not an unusual situation what happened next was: in addition the pulling their content from the cable package, subscribers to Cable One's Internet service were also prevented from watching Viacom's online streams.
This is a fairly unprecedented move, but one that is totally legal under the current "Wild West" net neutrality regulations. In the past all Internet subscribers were required to be granted access to all Internet content. After the net neutrality regulations expired, that requirement was no longer in place. As we know the FCC has been working to reinstate some, if not all, net neutrality regulations but currently its a lawless void.
Obviously a situation like this is exactly what net neutrality proponents have been afraid of: a company fully blocking its content due to licensing contracts. If Viacom is legally capable of preventing Cable One's subscribers from accessing their online content, what's to prevent them from forcing Cable One to pay more for their subscribers to have access to it in the future? Currently nothing.
With net neutrality conversations going on nationwide right now, hopefully this will elevate the level of conversation. As Avram Piltch mentioned last week, an Internet without net neutrality is an Internet devoid of real content and value. Avram isn't the only one concerned about Viacom's actions: FCC Chairman Tom Wheeler said that this is something "we should all worry about." This is a welcome statement from an organization who cannot seem to decide exactly where it stands on net neutrality.
As for Viacom and Cable One, they will reach an agreement and Viacom's content will come back to Cable One, but not before heating up the national debate.