With various reports (or still rumors) saying that Apple is about to purchase Dr. Dre's music streaming service and high-class headphone-maker Beats, does a $3.2 billion acquisition make sense?
It does if Apple really wants to get into the streaming business. Apple has a huge user base of iTunes fanatics and a great ecosystem its users can purchase individual songs digitally from. However, more and more users have been embracing streaming music and radio services such as Spotify and Pandora in the last couple of years.
Some say, in fact, that this is the next wave of the online digital revolution. Hard drive spaces are either being replaced by cloud storage OS streaming services, hence the reason SSDs are really taking off despite their high price per GB.
What is a bit strange about this deal if it comes through is that Apple already has a streaming music service in place, called iTunes Radio. It is ad supported and relatively new in terms of the Apple ecosystem, but Apple hasn't really been marketing it or pushing it on the level Pandora and Spotify do to their services.
Maybe Apple thinks that purchasing a competitor with a larger structure in place for streaming will be the better bet than pulling its resources into iTunes Radio. Beats Radio, the streaming service from Beats, is a recent endeavor by the company, as well, as it used to focus just on headphone design. But the service goes beyond just radio or simple streaming. Apple would reap these benefits.
Beats offers users the ability to custom pick their tracks through playlists that are based on things like listeners' moods. This expert curation does come at a premium though, with no free service options offered like Pandora or Spotify. It is really what makes the service stand out, however, as expert music listeners are hired to create custom playlists of tracks to listeners rather than the service relying on algorithms.
Another thing that would benefit Apple with this acquisition would be Apple's entry into the music world through Beat's co-founders: Dr. Dre and Jimmy lovine. Dr. Dre could boost Apple's image with the younger crowd and the large hip hop fan base, while Jimmy lovine could help connect Apple to record studios and musicians.
Apple, at one point, didn't believe that anyone would pay subscription fees for streaming music, however that was over a decade ago and the landscape has changed. Subscription may be the logical step to move forward in providing amazing streaming options to customers.
It will be interesting to see what transpires from these rumors of an acquisition and if it does happen, how Apple will push the marriage. It still doesn't sound believable to see Dr. Dre walking around in Cupertino with his swagger and hip hop appearance, but it could happen. Reports indicate that the deal is about to be finalized, but it still may fall through.
The real winner out of this deal from the looks of it thus far seems to be Dr. Dre. If it comes through, his pockets would be much bigger and his fame would keep on growing. He was already heard shouting that he will become the first billion-dollar man in hip hop with this deal, and it certainly appears he may be right.
