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Apple pursuing Beats buyout for Beats Music, source says

updated 12:13 pm EDT, Mon May 12, 2014

Beats' Jimmy Iovine seen on Apple campus

Apple took an interest in buying Beats Electronics because of Beats Music, according to a Bloomberg source claimed to be familiar with acquisition talks. Beats Music launched just earlier this year, but Apple executives are said to have been impressed by Beats' ability to convert people into paying subscribers. That could imply that Apple wants to improve iTunes Radio by upgrading its design and/or introducing more subscription options. The closest thing to an iTunes Radio subscription is iTunes Match, which removes ads from Radio but is intended mainly as a way of backing up a personal library and streaming it anywhere.

As for Beats' better-known headphone business, Apple will allegedly work with the company on improving the design of future headphones. Beats' technology is also built into speakers in some electronics, but plans for that hardware have gone unmentioned.

Talks between Apple and Beats are said to have accelerated in recent weeks. The source adds that Beats' Jimmy Iovine has been seen around Apple's Cupertino campus in the past week, and that he may be brought into the Apple hierarchy, reporting to CEO Tim Cook.

It's believed that an acquisition could be announced as soon as this week. The deal is expected to cost $3.2 billion, making it Apple's most expensive takeover ever. Beats co-founders Iovine and Dr. Dre should profit significantly; Iovine owns 25 percent of Beats, and the combination of that and over five decades of music production is forecast to push Iovine's net worth over $1 billion. Dr. Dre should collect $640 million from an acquisition.



By Electronista Staff
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  1. Jeronimo2000

    Forum Regular

    Joined: 08-20-01

    I stand by my words: I only accept to believe this when I see an official announement on apple.com/pr or something of similar credibility. And no, a video of Dr Dre celebrating means nothing to me.

  1. DiabloConQueso

    Fresh-Faced Recruit

    Joined: 06-11-08

    I'm with you -- it's only official when it's official. But, with every passing day, the credibility of the deal increases. It makes sense that Apple wants a high-profile, powerful streaming service, and with the limited options on the market today coupled with Beats' mass brand recognition (however crappy their headphones are), it may be the only remaining option that would give Apple an edge.

    Even with Beats' overpriced, bass-heavy headphones, anyone would be a fool to argue that Apple's EarPods are better (or even on-par). Apple's headphones are adequate if you want sound entering your ears, but there is lots of room for improvement. Perhaps Beats' headphone technology could be rolled into better headphones for iPhones and iPods.

    To recap: it's starting to make more and more sense, but again, it'll only happen when it happens.

  1. Gazoobee

    Forum Regular

    Joined: 02-27-09

    What I find amusing is how all the old white guys in tech are up in arms about this. You can tell from the comments here, but there are even worse on tech sites like AppleInsider where most of the top commentators are "old white guys." It's pretty hilarious how their racism is only a smidge below the surface of the debate.

    The way to look at this deal (and see what a good deal it is) easily, is to focus on the streaming service as the article says. Streaming music is the future, but services like Apple's "iRadio" (and most of it's competitors) aren't doing so well. The services that are doing well, are those that offer curated content. Beats is almost unique in this respect. They don't give you a stream like "Top40" or "rock" or "hip-hop," they give you curated playlists. So, despite their small size, they are one of the few in the business doing it right. Beats is more of a playlist sharing service, than a streaming service.

  1. coffeetime

    Mac Enthusiast

    Joined: 11-15-06

    Beats Music caters also to Android and Windows Phone platforms. If Apple bought it, Apple will kill those apps for sure or making it last for the next one year. Loyal Beats subscribers will look else where and another new music streaming company is born again. Beats Music will end up in the same fate as "Shake" software that Apple purchased long ago. Same cycle, same mistake.

  1. Jeronimo2000

    Forum Regular

    Joined: 08-20-01

    @Gazoobee: I haven't seen that racism angle anywhere, be it on or below the surface. Then again, I don't read AppleInsider, maybe that's it. :)

    Your argument about why buying Beats would be a good deal only has one problem: you seem to assume Beats is one of the services that's doing well. It isn't, from what I've read. 200.000 subscribers, something like that, no?

    I don't see much that Beats has that Apple couldn't do on its own. Apple has the infrastucture and the content (but probably not the right licences). Curated playlists? Hmmm. Worth 3.2 billion? Hmmmm.

    Then again, what do I know. What do we all know, really. Nothing. So let's see what happens.

  1. Gazoobee

    Forum Regular

    Joined: 02-27-09

    Originally Posted by Jeronimo2000View Post

    ... Your argument about why buying Beats would be a good deal only has one problem: you seem to assume Beats is one of the services that's doing well. It isn't, from what I've read. 200.000 subscribers, something like that, no?. ...

    Yeah I struggled with that wording "doing well" but I wanted to try to be brief.

    What I meant was if you look at the stats, most music streaming users don't even listen to entire songs. They skip three or four out of every eight songs or so as well. Most streams are automated like Apple's and basically are just a script that says "and add songs to the list like the first one" (the one that the user picked). Or work like Apple's "Genius" feature, which literally just suggests content from the same genre, or additional albums by the same artist (that the user picked at the start).

    It's not about how many subscribers Beats has, it's about the conversion rate between listeners and paying listeners and the retention rate of customers in general. Beats is way high on these counts.

    I think what's going on is that Streaming is about to explode (many people agree with that part), and that Apple is trying to get in on the *best* streaming solution, not the one with the most viewers so far. Most people who like music either pick their own tracks, or they go for a curated solution ("real" Internet radio is a good example). The other streaming services may be popular and have more listeners right now, but they are as lame as Top40 radio as to content and do not attract anyone who really likes or knows music.

    So, by "doing well" I really meant "getting it right."

  1. jdonahoe

    Junior Member

    Joined: 07-05-06

    I think Apple is doing it right. They have already said that iTunes purchases are down and continuing to decline. So why not purchase a streaming company that already has a base and expand it. Why reinvent the wheel?

    @Coffeetime
    I don't think Apple would ever consider cutting out the windows and android users, they represent a larger portion of users (for now...).

  1. Jeronimo2000

    Forum Regular

    Joined: 08-20-01

    @Gazoobee: ok, I'm with you now. Good point.

    I'm starting to think it's not a bad idea to start a streaming service not by creating, but by buying and improving it... and keeping the name (in this case: Beats). Many people I talk to don't connect the "iTunes" brand name with a positive experience. Yes, those are mostly Windows users. And the Fandroids downright HATE iTunes – you wouldn't get those guys to join the party if you kept the name around (in this case: iTunes).

  1. coffeetime

    Mac Enthusiast

    Joined: 11-15-06

    @jeronimo2000. You get me thinking there. iTunes indeed is the old iPod + sync way of connecting device. It's really a hub and it's becoming outdated. Not to mention it's super slow in syncing anything (especially that sending Apple data thingy). It carries lots of load in handling many things and people just hate going through it now-a-day. Apple needs to overhaul the entire iTunes experience.

  1. thebiggfrogg

    Fresh-Faced Recruit

    Joined: 07-06-07

    Exxxxxxxxxxxxxxxxxxxxxxxpeeeeeeeeerrriennnncccceee !

    Zoinks! Wa-doo-dam!
    :stick:

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