updated 09:33 am EDT, Fri May 30, 2014
Amount for Music may actually be in excess of service's value
In Apple's $3 billion takeover of Beats, $2.5 billion of that went towards the hardware division, while just $500 million was for Beats Music, according to the Wall Street Journal. Beats Music is a relatively new streaming service, having only launched in January.
The amount Apple paid for it may still be inflated. Yesterday Beats co-founder Jimmy Iovine revealed that Music has somewhere over 250,000 subscribers, far less than what services like Pandora or Spotify can count. It's widely speculated however that Apple intends to use Beats Music as a springboard for adding new streaming subscription plans to iTunes Radio; currently the only paid option is the ability to remove ads via an iTunes Match subscription. Apple may also be paying a premium for Iovine's skills in acquiring music rights.
Spotify has some 10 million subscribers, and recently raised $250 million on a valuation of $4 billion, or about $400 per subscriber. Applying those same metrics, Beats Music might only be worth $100 million.