FT: Apple to buy Beats Music for $3.2 billion

By , May 8, 2014

Apple Beats

Apple is said to be on the verge of finalizing what would class as its biggest acquisition ever, a deal to buy Beats Music in a transaction valued at $3.2 billion. According to a Financial Times report on Thursday, citing people familiar with the negotiations, the deal could be announced as early as next week. Nothing is certain though as the parties have yet to agree on certain specifics so talks could still fall apart. Apple and Beats both declined to comment on the rumor…

The specifics of the deal have been reported in this Financial Times article (behind a paywall) by journalists Matthew Garrahan and Tim Bradshaw.

Apple will acquire Beats’ streaming music service, which launched this year, and its audio equipment business, which includes its brand of headphones and audio equipment. The Beats management team will report to Mr Cook, said people familiar with the deal.

This sounds about right to me.

With this deal, Apple surely isn’t looking to re-brand Beats accessories under its own name: the firm is already carrying various Beats headphones in its retail stores. This must be about the Beats streaming service.

As I opined recently, there’s no doubt that Apple has missed the boat when it comes to on-demand music-streaming services akin to Spotify and the like.

Sure, there is Apple’s free of charge iTunes Radio. However, iTunes Radio is an Internet radio service and as such won’t let you just pick whatever song you want to stream. You also can’t create your own playlists in iTunes Radio with custom song order.

Although Beats Music has thus far failed to gain significant traction, consider for a moment that the service is barely four months old.

Another thing to bear in mind: music streaming services usually have stipulation in their contracts with record labels that prevent their companies from transferring streaming agreements to another party.

Beats Music (iPhone 5s, Find It))
The free Beats Music for iPhone app, now available for iPad, too.

If Apple is really buying Beats for $3.2 billion, the company will be paying a hefty premium as the startup took a $500 million investment from Carlyle in September 2013, putting its valuation at about $1 billion.

Could Apple be after the Beats brand here?

Founded by music producer Jimmy Iovine and the famous hip-hop star Dr. Dre, Beats Music certainly has the brand cachet and certain allure that might help put the ‘cool’ back in iTunes.

The authors seem to agree:

Mr Iovine and Dr Dre – real name Andre Young – were inspired to create Beats by the poor sound quality of the headphones bundled with the iPod and iPhone. Beloved by music and sports stars Beats has become a street-smart fashion brand.

And when you talk fashion, the iWatch name inevitable pops up in the discussion.

Ahead of Apple’s expected launch of an ‘iWatch’ accessory, Beats will also give its designers and engineers access to years of experience in what some see as the original “wearable technology”.

The rumor is especially newsworthy in the context of a Reuters story from a year ago.

beats audio jimmy

The news gathering organization basically reported that Apple’s Cook and SVP Eddy Cue – who runs iTunes, iCloud and other online services – had met with Lovine to talk about a “potential partnership involving Beats’ planned music-streaming service.”

For reference, Apple has purchased 24 companies in the past 18 months, all of them so-called acqui-hires: that is, talent and technology focused acquisitions. For what it’s worth, Tim Cook hinted last month that Apple was “on the prowl” for more acquisitions.

What do you guys think?

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  • Anthony Lara

    Apple buds and beats are equally horrible I can’t wait..

    • Maxim∑

      No they both sound pretty good. Apple earbuds certainly sound better than any other earbuds included with a phone.

      Beats has a very strong brand, Apple has some of the top audio engineers in the world. Combine the two and Apples 3.2B purchase makes sense

  • Jeffrey

    this is huge news! i always thought apple and beats music meant together!<3

    • Hyr3m

      Yeah they go very well together : they both have the crappiest sound quality in their respective markets.

      • Jeffrey

        lol i personally really think the new apple earphones are really good! i’m not saying this as a fanboy because i can admit that the iphone has a medium sound and that the old apple earphones were crap. but still, for standard earphones that come with a phone, they really are fair.

    • Maxim∑

      next is Tesla! (I hope)

  • Unicorn Drank

    Hopefully they make good use of this brand. I personally think the Beats brand is garbage, specially in the headphone department, it is just a popular brand because of these famous urban people wearing it. Makes me believe that they buy things just because famous people wear them.

    • https://twitter.com/MrElectrifyer MrElectrifyer

      Describes my experience with their Power Beats.

    • ✪ aidan harris ✪

      I have a pair of Beats Solo HD headphones which I really like. I didn’t buy them because of famous people wearing them I bought it because I genuinely liked them although I’ll admit the audio quality is definitely not audiophile quality but then I don’t think that was ever the point I’m pretty sure Sennheiser have plenty of headphones that are audiophile quality…

      • Unicorn Drank

        Im pretty sure that there are consumers out there that genuinely like the beats and I can respect that with out any issues but I am sure that a vast majority buy them because of the next person buying them without having a valid reason or because they saw some cool hip guy in a commercial wearing it.

      • Guest

        you do realize that beats headphones have one of the worst EQ curves in the history of headphones, right? Sennhesiser, Audio Technica, or sony are the way to go for a quality pair of headphones consumer/professional alike.

      • ✪ aidan harris ✪

        Yes I do realise that and like I said it doesn’t bother me one bit. I like them and you may or may not like them. We all like different things. Just like our tastebuds are different our ears are all different too. You may completely detest them and that’s fine. I personally believe Apple is mostly interested in Beats Music due to their music streaming service and who knows with Apple running things Beats may end up producing more professional / audiophile headphones in the future…

      • TeChNoStyLeZ

        some good pairs of headphones are the sms audio. They combine style which is something a lot of people are searching for in the headphone industry and sound quality. They also have a pounchy bass which is what most young people are looking for.

    • Antzboogie

      I have to disagree the bass is amazing and why arent the other companies promoting their brand as much? I didnt even know how much headphones could be so crisp. Dont you get it? Half the population are not DJs or music recording producers to know how many different headphones were out there. Now I know more then ever of all the brands because of Beats headphones so watch your mouth before you call a brand garbage.

      • Unicorn Drank

        I am not going to “watch my mouth” since my comment was an opinion and not a fact, if you can’t seem to speak in a more respectful way, then I would be more than happy to get on the same level and speak to you as if I was a little boy disrespecting an their parents.

        Yes, Beats headphones do have great bass but so great that when you try to listen to a different kind of genre it sounds horrible as if they are just made for a specific genre (when you go to the demo units in Best Buy they only have pop music and rap/ hip-hop). I don’t work for other companies, it is difficult to answer that question as I am not involved in their marketing departments. Yes, I get the fact that for YOU the headphones sound crisp. I know half the population are not DJ’s nor music recording artist and I am pretty sure that more than those kind of people can make a conscious decision about buying headphones, all I did was go to different stores buy the product and test out different brands, if that takes a DJ to that, then I really feel bad for people that just buy things because they a followers and let so called public figures make decisions for them. I am glad the Beats brand opened your eyes to different brands, I also think that Google has thought me more than that and has also taught me to that Beats headphones are a rip off, by just making a simple search.

  • Jonathan Ramirez

    That last paragraph doesn’t make a lot of sense.

  • onesimpleclickk

    Beats are shit though. Why Apple? Why..

    • Rowan09

      Beats makes millions so I guess that’s why. The streaming service is also doing well so far.

      • M_thoroughbred

        I use beats music and I really like it I don’t like their headphones but their streaming music app is awesome.

      • Nesly Lacroix

        I am winding down my 3-month trial of Beats Music. It’s a joke. No radio, the web interface is crap, and the mobile app is mediocre at best. The hidden jewel is MOG which they planned to shut down. Hope they keep MOG. MOG audio is way better than Beats Music’s.

      • Jeffrey

        apple is hardly interested in the profit of a company they buy, it’s their patents and services they’re interested in. i think they bought it to implement the streaming service in their own products (just like they bought siri)

    • Franklin Richards

      I think Apple is more interested in the streaming service than the headphones themselves

      • Jeffrey

        they still bought the hardware department too, wonder why that is (they could have only bought the streaming service)

      • Franklin Richards

        The deal was probably all or nothing. Or Apple couldn’t wait or be bothered with working out how to split the company in half and just bought it as a whole. Or Apple plan to make Beats hardware good (lol).

      • Jeffrey

        yeah i think it’s for the patents though….

  • James Gunaca

    I bet Dr. Dre is stoked.

    • Semeth

      Dr Dre doesn’t use Beats in the studio.

      • M_thoroughbred

        He may no use the Beats in the studio but will the cash lol

  • Christian Mejía

    Does think make Dr.Dre richer than Diddy?

    • Jeffrey

      if think means this then yes. Dr. Dre is now the richest hiphop artist in the history of the world, he also is the first billionaire hiphop artist in the world

  • Matt

    I mean if iPhones are to get “Sound Powered by BeatsAudio” – they better have an off switch because my Bang and Olufsen earphones do not deserve that.

    • Hyr3m

      Your Bang and Olufsen earphones deserve to be plugged in to a better sound output than an iPhone… even Blackberries have better sound output quality than iDevices…

      • Matt

        You sir are correct that’s why I have a FiiO E11
        But it adds extra unnecessary bulk so I use it rarely.

      • Hyr3m

        You may have the best oven in the world but if you make your tart with cheap ingredients it’s not going to taste good…

        Unless you use a 30pin connector digital audio output (or lightning equivalent, if it exists ?) to connect your phone to your FiiO E11 amplifier, you’re basically amplifying a crappy sound output…

  • http://www.obsessedcreative.com/ Obsessed Creative

    Barf… what a total and utter waste. Talk about a company not “getting it”. My god I miss you Steve Jobs.

    • Jeffrey

      still they are the richest company in the world, 9 times as rich as the US government… i don’t see you leading a company like that? i think apple knows a bit more about what they’re doing than you…

      • Zaidan Umar

        Finally someone intelligent

      • Jeffrey

        meeee? awwwww<3

      • Zaidan Umar

        yea u <3 :P

      • Jeffrey

        awww:)

  • Chindavon

    Would be a match made in Heaven.

  • Benjamin J Schwartz

    this makes no sense. Beats certainly didn’t help HTC at all. And if the record contracts are non transferable then why would apple pay that much for nothing?

    • ✪ aidan harris ✪

      In my opinion Apple buying Beats Music makes perfect sense due to the fact that it has been known for sometime now that iTunes has been making less and less money and is losing out a lot to streaming services. By buying Beats Music Apple would inherit the insanely awesome (but US only) Beats Music app which Apple could easily adapt to create their own streaming service saving an awful lot of time and assuming it would be relatively cheap and free to iTunes Match subscribers Apple would likely make a lot of money from it and easily recoup their $3.2 billion…

  • KGBBERSERKER

    Why didn’t they just buy Spotify? They have the capital…

    • ✪ aidan harris ✪

      Spotify is extremely profitable and likely would refuse any advances Apple made. Saying “Why doesn’t Apple buy Spotify?” is a bit like saying “Why doesn’t Apple buy Google?”. It’s just not going to happen…

      • oralarts

        Spotify has yet to reach net revenue positive.

      • Sean Clark

        Profitable is not the right word, but once you include its assets (licensing rights, userbase, infrastructure, etc.) the business is worth quite a lot.

  • GuyBey0ndC00L

    Apple making a fruit salad they added beats.

    • Jeffrey

      soon they’ll buy blackberry too to finish their salad:)

      • GuyBey0ndC00L

        lol They should buy BB, just to finish the salad of course.

      • Jeffrey

        hahah yeah:P

  • 323K137

    I think his last name is Iovine not Lovine.

  • Jaelen D Josiah H

    No thanks, but it would bring more money to their headphones.

  • Taf Khan

    A good purchase Apple. Beats headphones packaged with an iPhone? Yes please. Can’t be a bad thing if the price stays the same.

  • Obaid Yasin

    Apple and beats are my favorite.. I wish this deal happens

  • oralarts

    Overpriced, mediocre headphones with a bass heavy sonic signature. No thanks.

    I just don’t see what Apple gains from this deal.

  • Framboogle

    Soon…

    • Jeffrey

      lol this one’s better:P

  • Mohammad Ridwan

    An Overrated brand. Don’t do it Apple.

  • Umut Bilgiç

    Oh man. It is nice for the streaming service but headphones? Nah. I really don’t like beats headphones. I think they sound terrible and the price tag for such a bad headphone makes it even worse :(

  • eminem10

    this is a perfect combo, their presentations are so alike

  • El Matador

    iBeats.

  • CODENAME_CAFE

    Apple and Facebook want to buy everything lol. Apply to buy google for $(insert a number here but make it crazy) billion

  • Byron C Mayes

    This is for the streaming service AND for the future. An integrated iTunes (non-radio)/Beats streaming would be a killer service. The headphones are just gravy (and extra revenue). Apple doesn’t buy for what’s available now. They buy for what they can do in the future.

    Meanwhile, the interface on Beats’ iOS app is so much nicer than the two main competitors, Rdio and Spotify. I can see myself leaving both for Beats in a…well heartbeat.

  • Sleaka J

    So many people seem to think this is about the headphones. It’s not. This is CLEARLY about the music streaming.

    • Hyr3m

      And maybe about the output quality ? iPhones and iPods have the worst sound output quality out there. Low-fi crap comparable to 5$ Chinese mp3 players…

  • Raul M

    IPhone 6 with beats Audio?^_^

  • Matt Dowdy

    Maybe we’ll end up with front facing speakers on the iPhone like the HTC one. The quality of the on device speakers on the one are far superior to any other mobile phone and maybe they would put one in the “Iwatch” too

  • Dani Hayes

    Beats are nothing but a name marketed to the masses for overpriced headphones. As a music producer I have used many headphones and nothing compares to Sony or AKG. You can get much better headphones at a music store than an Apple store, or wherever else Beats are sold, for the same price.

  • Ash

    iBeats? Ha. I extremely hope iPhones do not end up printed all over with BEATS AUDIO or have anything to do with the company because quite frankly their products are awful for the price of which they retail for.

  • TeChNoStyLeZ

    I hope that this will not make idevices come with that horrible beats eq that all beats headphones have

  • Nesly Lacroix

    A shocking development and a bad deal if you ask me. Apple has lost its ways. Apple has everything to make their own on-demand streaming music. They already have the infrastructure with iTunes Radio. They only need to add access to their catalog for on-demand.

  • n0ahcruz3

    Beats headphone = POS.

  • Zaidan Umar

    The apple earpods are amazing…..beats are even better! Those sayin otherwise are just people who have no idea about music :/

    • Hyr3m

      One day you’ll plug a good pair of headphones in a good sound output (not even talking about professional stuff) and you’ll realize you haven’t heard half of the music in your favorite songs.