The status is no longer complicated. From being steady for years, Apple and Beats Electronics finally come together, and the deal is worth $3 billion.
Apple confirmed in a statement that it acquired Beats Music and Beats Electronics for $3 billion, with an estimate of $2.6 billion as purchase price and $400 million to be awarded over time.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” Apple CEO Tim Cook says in a statement. “That’s why we have kept investing in music and are bringing together these extraordinary teams so we can continue to create the most innovative music products and services in the world.”
Beats Music is an infamous by-subscription streaming music service, while Beats Electronics is a manufacturer of speakers, headphones and audio software. Beats business was co-founded by Jimmy Iovine and Dr. Dre, who are described as artists, entrepreneurs and pioneers. The co-founders will join Cook in Apple as part of the billion-dollar acquisition deal.
“I’ve always known in my heart that Beats belonged with Apple,” Iovine says. “The idea when we started the company was inspired by Apple’s unmatched ability to marry culture and technology. Apple’s deep commitment to music fans, artists, songwriters and the music industry is something special.”
Apple says Iovine has been an instrumental partner, for over a decade now, for the company and iTunes, producing or collaborating with several of the most-successful music artists in iTunes Store history, which helped make the store the leading music retailer in the world.
“The addition of Beats will make our music lineup even better, from free streaming with iTunes Radio to a world-class subscription service in Beats, and of course buying music from the iTunes Store as customers have loved to do for years,” says Eddy Cue, Apple’s SVP of Internet Software and Services.
Research shows that even as iTunes continue to dominate the music downloading business, the undeniably emerging popularity of other music streaming services such as Pandora and Spotify may soon shake the music download service, out of service.
Latest revenue figures from the music recording industry somehow indicate such deteriorating consumer interest in music downloads by one percent in 2013 to $2.8 billion, and the rising interest in paid subscription music streaming at 57 percent to $628 million. That said, music streaming services delivered 21 percent of the total music revenue in 2013.
Apple invested in the music streaming competition only in September 2013 with the launch of iTunes Radio, which is a free music service supported by advertisements. The acquisition of Beats was seen as another step for Apple to get into the game of music streaming.
Some analysts remain mystified, however, as to why Apple couldn’t establish its own music streaming service or as to why it swiftly showed interest in the business of music accessories, even though Apple already mentioned its reasons for the Beats business acquisition.
