It’s official. Apple has agreed to purchase Beats Electronics LLC for a reported $3 billion (which is $1 billion more than what the Los Angeles Clippers are going for) per the Wall Street Journal. Founded in 2006, Beats Electronics was created by hip-hop mogul Dr. Dre and Interscope-Geffen-A&M Records chairman Jimmy Iovine and specialized in headphones and speakers. The company was also partially owned by HTC who sold their stake last year.
Along with the headphones and speakers, Apple will be gaining a music streaming service (Beats Music) that hasn’t caught on as much as its creators had hoped. However with Apple at the helm, they’ll now have a larger group to market towards and compete with the likes of Spotify and Pandora. This is one of the main reasons Apple went for the deal, even though Beats Music subscriptions have been lacking with 250,000 subscribers at $10 a month since July 2012. Compare that to Spotify’s 10 million worldwide subscribers and Pandora’s 3.3 million paying subscribers.
Possibly the biggest benefit to Apple’s new purchase is the celebrities that come along with it. Dr. Dre and Iovine will be staying on to continue the Beats dynasty while working to increase Apple’s musical capabilities. Not only are the two moguls staying aboard, but they’ll be bringing their celebrity friends along. Everywhere you look, athletes are wearing Beats headphones. The biggest name is LeBron James (who has a promotional deal with Samsung phones) who purchased Beats for the entire 2012 US Olympic basketball team, as well as the Cleveland Cavaliers and Miami Heat. He also has designed his own Beats that are available for purchase. In the football world, Colin Kaepernick was featured in a Beats commercial during last season. During pre-game, on-field commentary you can see a number of athletes with the recognizable headphones warming up.
Beats by Dre: Colin Kaepernick
This is an interesting, albeit smart, purchase for Apple. Their music sales have slowly dipped as Spotify and Pandora have gained momentum. Even though Beats Music hasn’t taken off as well as the creators had intended, the minds at Apple (along with their huge market) should be able to give the other streaming services a run for their money.
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Via [Wall Street Journal]