We’ve seen mega deals dished out by tech moguls to acquire start-up companies and various applications that expand their brand, but never one quite like this. For the past week, we have been anticipating Apple’s groundbreaking acquisition of Beats Entertainment, reportedly for over $3 billion.
Some are scratching their heads as they see the figure next to the reported sale. Beats Entertainment, which sold 50 percent of its company for $500 million to an investment firm last year, is now about to receive $3.2 billion—triple their worth from a year ago. Why is Apple making this offer? What is their PerZpective? In the land of technology, bold moves must be made. As a company that has a wide consumer base with their iPhone, iPad, iTunes, and even still the iPod, Apple has been dominated in the streaming music space. iTunes Radio, launched only 8 months ago, has been a dud compared to the likes of Spotify, Pandora, and most recently, Beats Music.
But, we’re throwing around billions of dollars here, and there is barely any money to be made from streaming services. Pandora and Spotify don’t see profits. Beats Music is purely subscription based—you must pay to use it—and Apple is hoping the name Dre, mixed with their brand, will result in a spike in the amount of subscriptions. Beats Music has been doing surprisingly well in its early stages, making Apple want in before another tech giant swoops down.
A merger would benefit both corporations. And merging is really what this is, it’s no acquisition. If and when the deal is finalized, Apple will have senior executive positions ready for both Dr. Dre and Jimmy Iovine, the co-founders of Beats Entertainment. For Apple, this deal is all about music. Beats will get the exposure of Apple customers while Apple brings in two of the brightest music minds to steer them in the right direction. Plus, they acquire the algorithm of Beats Music that is unique and one of a kind.
We don’t buy albums anymore, not even singles. Our devices are capable of playing the songs we want to listen to when we want to listen to them. We listen on the go, in the car, walking up the street, at the gym, and in the house. Apple can replace their iDock with the quality Beats Pill, their outdated white earbuds with the comfortable, sound canceling headphones, and incorporate Beats Music to replace iTunes Radio, adding tremendous value to their music department. Though it’s still unclear how they plan to incorporate a subscription based music platform into their free iTunes where millions of people store their music and videos.
With the popularity of Google, Facebook, Amazon, and Samsung—companies that consistently create and acquire innovative technologies—Apple is sending a message. Not only is CEO Tim Cook looking to improve his streaming music, which he undoubtedly will, Apple will have set the foundation for wearable technology. Beats is a step towards the future, giving Cook and Apple a stylish and colorful look when they make the jump to wearable gadgets. After all, we wear Beats headphones, it’s fashionable; maybe Apple can develop a wearable gadget that changes the way we see wearable tech as a fashion statement.
This will be just another landmark achievement for music mogul Dr. Dre. Dre has risen through the ranks to become the most successful figure in hip hop history. From The World Class Wreckin’ Cru to The Chronic and Aftermath Entertainment, Dre has changed the game once again with his founding of Beats Entertainment. His entrepreneurialism and music intelligence have allowed him to keep an eye on the latest trends, anticipating what lyrics, beats—and now products—will fascinate music lovers. With the presence of Apple behind him, he’ll have the resources to continue to create innovative technologies that appeal to the masses.
As the deal has sent waves through the media and the industry, once it is finalized Apple will aim to reclaim the top music platform since iTunes was released in 2001. Clearly in need of a change, this just might be the best $3.2 billion ever spent for one of the most powerful companies in the world. It all depends on how they market the Beats technologies once they have that little apple on them.