UPDATE: Dre Dre and Jimmy Iovine are Full-Time Employees of APPLE! Beats Deal Finalized
CUPERTINO, Calif. (AP) — Apple is striking a new chord with a $3 billion acquisition of Beats Electronics, a headphone and music streaming specialist that also brings the swagger of rapper Dr. Dre
and recording impresario Jimmy Iovine.
Wednesday’s announcement comes nearly three weeks after deal negotiations were leaked to the media. It’s by far the most expensive acquisition in Apple’s 38-year history, a price that the company is paying to counter a threat posed to its iTunes store.
The price consists of $2.6 billion in cash and $400 million in Apple stock that will vest over an unspecified time period. The deal is expected to close before October.
With $1.1 billion in revenue last year, Beats is already making money and will boost Apple’s earnings once the new fiscal year begins in October, Apple CEO Tim Cook said in an interview.
“We have known these guys forever,” Cook said of Iovine and Dre. “We’ve dated, we’ve gone steady and now we are getting married. This relationship started a decade ago, so we know there is an incredible cultural fit. These two guys have a very rare set of skills. It’s like finding a particular grain of sand on the beach. It’s that rare.”
Iovine, 61, and Dre, 49, will both become key executives in Apple’s music divisions, though Cook said their roles haven’t been determined yet. Cook indicated Beats’ music streaming service was the main selling point in the deal, though the headphone line also is expected to continue growing, too.
Although he believes most technology companies are “culturally inept,” Iovine said he believes Apple will empower Beats to realize its goals of improving the sound of digital music and creating playlists tailored for each subscriber.
“To complete our dream, we needed a company like (Apple),” Iovine said in an interview. “We couldn’t finish this on our own.”
The growing popularity of music streaming services such as Pandora and Spotify has been reducing sales of songs and albums, a business that iTunes has dominated for the past decade. U.S. sales of downloaded songs slipped 1 percent last year to $2.8 billion while streaming music revenue surged 39 percent to $1.4 billion, according to the Recording Industry Association of America.
Although Apple broke into streaming with the launch of iTunes Radio last September, the service has not been as popular or as lucrative as the company expected, according to two people familiar with the matter. The people were not authorized to speak publicly about the matter and spoke on condition of anonymity.
ITunes Radio has 40 million listeners will continue as a free service with ads while Beats Music will try to tap into the more than 800 million accounts to sell more subscriptions to its customized service. Beats Music currently has more than 250,000 subscribers, Cook said. That’s well below the more than 10 million paying customers that Spotify’s streaming service boasts.
Apple is counting on the Beats acquisition to boost its cachet with teenagers and younger adults as it tries to remain a leader in digital music — an industry that looks much different than when Apple reshaped the scene with the 2001 debut of the iPod.
71 thoughts on “UPDATE: Dre Dre and Jimmy Iovine are Full-Time Employees of APPLE! Beats Deal Finalized”
Awesome move..Ima fan of Apple..hopefully the next iPhone will hav the Beats in them!! Or maybe Dino Simmons will surprise me wit sum PINK 1’s
right Byron Beasley
I look at it like this… It’s a win win for Dre and Jimmy no matter what simply because if you read and study the stories of the Forbes Fortune 500 multi- millionaires and billionaires the story reads like this.. They started a business built the value in it and sold it for a ton of money lol ! Then all they do is take some that money and invest it to start an even better business than the first one! It’s all because they have the billionaire mindset! I admire those guys.
If that’s true…that could be better.
Tutan A Smith They are saying that they will keep everything the same and let dre and jimmy continue to run it just under the Apple umbrella
I’d have to know the details of the deal. He’s a billionaire which is great…but eventually will Apple take his Beats by Dre and turn them in Apple’s new headphones? I would’ve kept the headphone invention and worked on some more quality products with Apple.
Tutan A Smith what do you think bro? Good or bad fam?
Their quality sucks. The monster beats were much better. They cut corners and made them worse. I had a pair of monster beats, sent them in bc they broke, they sent me htc beats tours. The quality of the tours is horrible. The cable at the connector cuts out. I cant wait till they break to replace them with non beats stuff