The disruptor has become the disrupted. Apple, the company that turned the music industry upside down with the launch of the iTunes Store in 2003, saw digital download sales drop for the first time ever last year. Why? Streaming music services.

The folks out in Cupertino failed to see the rise of the Rdios and the Spotifys, and thus have been forced to play catch-up. And according to a new report from The Wall Street Journal, that’s exactly what this rumored Apple-Beats acquisition is all about…

The Journal’s Hannah Karp reports:

Record-company executives say they’ve been lobbying Apple for months to create its own subscription streaming service, using its brand power to familiarize consumers with music streaming—a concept that is still foreign to many people, especially in the U.S. Spotify launched in the U.S. three years ago after years of licensing talks, and Beats Music made its debut just over three months ago, advertising during the Super Bowl and on Ellen DeGeneres’s talk show in an effort to reach more mainstream listeners.

Among the ideas record companies have floated to Apple in recent months: iTunes could suggest to users about to purchase certain albums that they instead buy a month-long subscription to a streaming service, for the same price.

Apple, on the other hand, had pitched more download-centric ideas in recent months, according to people familiar with the matter. One such suggestion was that record companies release all new albums exclusively on iTunes in album-only format for a window of time to drive album sales, before releasing the singles separately and making them available on streaming services. But labels countered that such a strategy—employed successfully by Beyoncé last year—wouldn’t work across the board.

Karp goes on to say that record executives were surprised at Apple’s reluctance to get into subscription streaming earlier, noting that it could be compared to the record companies’ resistance to digital downloads 10 years ago before iTunes debuted.

So you can see how these acquisition talks with Beats came about. After years of ignoring streaming music, a mediocre launch of iTunes Radio last fall, and growing pressure from its record label partners, Apple obviously felt that it was time to move.

beats iphone

In recent months, it’s been reported that Apple was considering multiple strategies to combat declining iTunes music sales. Among them was a proposal to launch an iTunes Store on Android, and to add a standalone iTunes Radio app with the iOS 8 release.

Keep in mind that neither side has confirmed the buyout yet, though it appears that Beats co-founder Andre ‘Dr. Dre’ Young believes it’s a done deal. Earlier today, a video surfaced of rapper and producer Dr. Dre proclaiming to be Hip Hop’s “first billionaire.”

On Thursday, the Financial Times reported that Apple was in ‘serious talks’ to acquire Beats for $3.2 billion.

  • Toukale

    I find it funny reading all those so called journalists or experts are saying apple is playing catch-up to a bunch of services that is yet to make any money. None, I repeat none of the streaming services are in the black. From spotify to pandora and all in between. Let’s forget that itunes makes more money than all of those so called services combine. While the future is certainly streaming non of the current players have done jack so far to win it.

    • gittlopctbi

      Good point!

  • Victor Molina

    If Apple does acquired beats I can totally see the iPhone 7 (cause it’s too late for the iPhone 6) with beats hardware… One word AAWWWSSOOMMEEEE

    • DroidDoesnt_2

      You mean the iPhone 6s…

      • Robin Keanu Keim

        Maybe the s in iPhone 6s will stand for Sound?! ^^

      • Franklin Richards

        Surely you mean iPhone6b

    • Guest

      The “Beats” component of my HTC One was simply an equaliser paired with the kick ass speakers on that phone. All the iPhone needs to do is improve the speakers on the phone and flog in an equaliser that adjusts the bass and vocal volumes.

  • abazigal

    Wall Street Journal…do they even have any credibility left after so many of their inaccurate articles about Apple?

  • Royce Otero

    Anyways how is the Galaxy S5 doing?

  • Andrew Roth

    The iPhone 6:
    Design: Basically an HTC One.
    Camera: 1/2 HTC, 1/2 Nokia.
    Speaker: HTC One (Beats)

    I love Apple I just don’t get why people are so resistant to acknowledge that not all of their ideas are completely original.

    • Chun-Li aka ThunderThighs

      “Yet we going to cover it up like it was all Apple” – Apple Fanboy

    • eXoguti093

      iPhone 5 metal design came first, and who said they’d put beats speakers on they’re phones, they’re just talking about buying the company..

      • “iPhone 5 metal design came first”

        Says the one who didn’t do their homework. The HTC Desire has been out for 4 years dude, ignoring it ain’t gonna change that…

      • eXoguti093

        Eh it’s not like metal backs are patented by HTC

      • And where did you read me claiming that HTC patented metal body design? Just ’cause HTC didn’t patent it like Apple that patents rectangles, doesn’t change the fact that it came before the iPhone…

      • eXoguti093

        Why do you assume that it looks like I read you say something about that, I just said it, chill the f out

      • ‘Cause you f’n replied to a post that was talking about that point! If you got nothing related to the point, don’t f’n reply, simple.

      • eXoguti093

        *sighs* alright fine, I guess the only respect I have for you is that you’re knowledgeable and not biased in this sort of thing, but you really really dial down the way you speak when replying to someone that knows less, just inform them, they’re not stupid other people just have other interests

      • Andrew Roth

        Lol I was waiting for somebody to pull out the Apple patented rectangles argument. 🙂

    • AppleFanboy

      Tell me more about the specs of the iPhone 6 since you clearly know everything about it.

      • Andrew Roth

        Well I do have lots of information on it, but I’m not telling anything here. I would tell exclusive details about the iPod Touch 6, but iDB said they won’t publish them because they aren’t 100% sure about the source. (It’s a leak… you’re never going to be 100% sure…)

    • Prathik Nair

      Design is basically not an HTC one design. If you recall, when apple revealed the new two tone iPhone, HTC came out in the next few months flat out copying apples two tone design. The only difference is that the HTC one has more a curved body. Apple has the right to do whatever they want in the design area, because most of the time they are being copied.

      • Right, and guess where that “two-tone” iPhone design came from…

      • Byron C Mayes

        Because none of the smart phones by any other manufacturer look anything alike.

      • Andrew Roth

        This looks nothing like an iPhone 5. The iPhone 6 looks exactly like this however… Open your eyes bro…

    • M_thoroughbred

      The same way people downplay them for most of the things they have done.

  • Maxim∑

    Apple has been making a lot of moves recently, probably lots of changes coming

    • Franklin Richards

      They have been rather silent for a while. Maybe all the behind the scenes stuff are surfacing in time for the WWDC.

  • Jimmy Lovine tried to pitch to Steve Jobs about the music streaming services a few years from now:

    Lovine’s pitch: It took guys who know music and culture to sell high-end
    headphones to the mainstream. And it’s going to take the same skill set
    for music subscriptions, which have been around for about a decade but
    are only now getting some traction.
    «Iovine and his team aren’t talking about details yet, but he is more
    than happy to talk about the history behind his next venture — he says
    he wanted to get into music subscriptions before he got into headphones —
    and why he thinks he can do better than Rhapsody, MOG, Rdio, Spotify,
    Deezer and the other competitors on their way.»

    This is an excerpt from an interview he gave on AllThingsDigital in January 2013.

    So it seems like yes: Android users matter to Tim Cook 😉

  • W Spence

    What most people do not realize is that Beats does over half a billion in revenue selling hardware. So even if no one ever figures out how to make streaming profitable, Apple will have a chance to make back their money selling Beats hardware. Thats why it makes more sense to buy Beats instead of a stand alone streaming play like one of the others. However that price still has me scratching my head. Very curious how this plays out.

  • Christopher

    Hmm, maybe the next iDevices will come prepackaged/fit with “Beats-engineered EarPods & speakers”… Beats + Apple technologies…= Mind-blowing.