We’re hearing that the official announcement could very well be this week, as Jimmy and Dre may be on the stage for WWDC, BUT instead of $3.2B, it may be only $3B, and the loss of $200M could be coming from Dre ‘freaking Apple out’, and Apple looking into the actual subscription base of Beats Music app, which is lower than expected(at least what Apple expected).
Still, the company is understood to place a high value on the profitable Beats audio business which retails headphones — costing up to $450 — and speakers around the globe.
That business recorded sales of $1.3 billion in 2013.
Beats reportedly has 110K paying subscribers, but in the face of Spotify announcing a BIG 10M subscribers, Beats subscription base seems a little shmall. BUT with a report of iTunes Sales being down(See Chart in Gallery Above), Apple is desperately looking to bolster their streaming services, so the deal is going to happen!!
Update:
So it’s official as the big chief, Tim Cook, has spoken, Apple/Beats deal is inked(not dry but inked), and as rumors prove true, Jimmy and Dre will be Apple execs, but like fo real, as Jimmy will step down as long time Interscope Chairman and CEO so he can fully focus being an exec at Apple. The Deal is $2.6 in cash, $400M to vest. Beats is expected to make $1B in sales next year, proving well worth the investment.
Apple® today announced it has agreed to acquire the critically acclaimed subscription streaming music service Beats Music, and Beats Electronics, which makes the popular Beats headphones, speakers and audio software. As part of the acquisition, Beats co-founders Jimmy Iovine and Dr. Dre will join Apple. Apple is acquiring the two companies for a total of $3 billion, consisting of a purchase price of approximately $2.6 billion and approximately $400 million that will vest over time.
“Music is such an important part of all of our lives and holds a special place within our hearts at Apple,” said Tim Cook, Apple’s CEO. “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.”
“I’ve always known in my heart that Beats belonged with Apple,” said Jimmy Iovine. “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.”
Now Beats Music(App), Jimmy and Dre will answer to Apple’s Eddy Cue, Sr VP of Apple’s Internet Software and Services Team. The Headphones and Evices will be under Phil Schiller and his marketing team.
This is a letter from Tim Cook to the Apple Employees:
Team,
This afternoon we announced that Apple is acquiring Beats Music and Beats Electronics, two fast-growing businesses which complement our product line and will help extend the Apple ecosystem in the future. Bringing our companies together paves the way for amazing developments which our customers will love.
Music is an important part of our lives and our culture. Music has the power to inspire us, to comfort us, and to send our emotions soaring. It brings people together and transcends the limits of spoken language.
Apple’s history in music began with selling Macs to musicians. That remains important to us today, but we also bring music to hundreds of millions of customers with iTunes, which is at the forefront of the digital music revolution. Music holds a special place in our hearts at Apple, and we know that we can make an even bigger contribution to something that is so important to our society. That’s why we have kept investing in music and why we’re bringing together these extraordinary teams — so we can continue to create the most innovative music products and services in the world.
Beats co-founders and music industry pioneers Jimmy Iovine and Dr. Dre will join Apple, along with their team of employees. Jimmy has been on the cutting edge of innovation in the music industry for decades, including as a key partner for Apple in the launch of the iTunes Music Store more than ten years ago. He has produced or collaborated with some of the most popular artists in history, and been an important contributor to the success of the iTunes Store.
Beats Music was built with deep respect for both artists and fans. We think it’s the first subscription service to really get it right. Both Apple and Beats believe that a great music service requires a strong editorial and curation team, and we will continue to expand what we do in those areas. The addition of Beats will make our incredible iTunes lineup even better, extending the emotional connection our customers have with music.
The Beats Music team will report to Eddy. The teams will be getting to know each other better in the weeks ahead, and we are very excited about the possibilities for the future.
Beats Electronics has become the brand of choice for headphones and speakers in both the music and sports world, just five years after its launch. They are among the most popular and highest-rated third-party products sold today in Apple’s retail and online stores. We see an incredible opportunity to bring Apple’s legendary design and engineering capabilities to these popular products under Phil’s leadership.
Please join me in welcoming Beats to Apple. I hope you are as excited as I am about this new chapter in our history.
Tim
It’s also reported that the Android and Windows Phone versions of Beats Music app is in NO trouble an will continue to flourish on those(competing) OS’s.
This is going to be so exciting to watch!!
