Apple gives convicted felon $3 billion for Beats

29 May 2014

In news that will be reassuring to Chris Brown, Apple has confirmed it will acquire headphone and speaker peddler Beats Electronics – along with its subscription streaming service Beats Music, and the services of Beats CEO Jimmy Iovine and convicted criminal co-founder Dr. Dre – for a cool $3 billion.

Comprising of $2.6 billion in cash and $400 million of company stock, the deal is expected to be finalised by the end of the year, although is still subject to regulatory approval.

What this means for Apple is more than simply now owning both the Beats by Dre range of high-end headphones, and the fledgling Beats Music service. The company can now add music industry legend Jimmy Iovine, and former gangsta rapper/producer/noted lady-beater Andre ‘Dr.Dre’ Young, to its executive ranks.

What next for Beats Music?

What exactly Apple plans to do with Beats has been the subject of much speculation.

Apple will apparently keep Beats Music as a separate brand from its own iTunes service, but current iTunes chief Eddy Cue may take over as the head of the subscription service (with Apple marketing chief Phil Schiller assuming responsibility for Beats Electronics’ headphone range).

Both Dr. Dre and Iovine intend to work with Apple to expand its range of music products and services, with Iovine planning to resign as the CEO of Interscope Records.

Dr. Dre, meanwhile, will officially become ‘the first billionaire in hip-hop’; an admirable achievement from the man responsible for 'F**k Tha Police' and various assault and battery charges.

Currently a multi-platform service, Beats Music will continue to be available to Android and Windows Phones users, rather than becoming an iOS exclusive. Although Beats Music is a relatively new player in the digital music industry – having launched in January of this year – the service already has a partnership with US wireless carrier AT&T.

Seeing as music downloads are beginning to decline worldwide while the popularity of streaming services is steadily increasing, the purchase may be Apple’s attempt to grab a piece of the pie without having to build its own service from scratch.

What about headphones?

Iovine himself considers the deal a match made in brand heaven, telling media that he has been inspired by Apple’s "unmatched ability to marry culture and technology.”

Both Beats and Apple know the power of great marketing and the power of pop culture, and although the ‘b’ logo and orange branding favoured by Beats hasn’t quite reached the household recognition of Apple and its products, the deal has the potential to pay off for both parties.

The fact that the Beats range of audio products is a market leader with a ‘cool’ image favoured by both celebrities and the youth demographic – the opinions of audiophiles and tech experts notwithstanding – may inject some much-needed street cred into the Apple brand.

With a promise to ‘invest in music’ through its Beats acquisition, there’s also whispers that the purchase may be Apple’s way of bringing in fresh blood and ideas to help the company with its eventual foray into the wearable tech market.

Whatever the reasons behind the deal, the elevation of Dr. Dre to tech executive status can’t be good news for Marissa Mayer, Sheryl Sandberg and company. These ladies better watch their backs, or else they might find themselves pushed down a flight of stairs courtesy of Dre.

Image credit: Kārlis Dambrāns at Flickr



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