After a couple of weeks of rumour and postulation, Apple has now signed a deal with Beats Music and Beats Electronics, acquiring the headphone/audio products company and subscription music streaming service for US$3 billion, broken down into a purchase price of around US$2.6 billion, with a further US$400 million to be invested over time.
As expected, the charismatic co-founders of Beats – Jimmy Iovine and Dr. Dre (aka Andre Romelle Young) will join the Cupertino California tech giant. Both will report to Apple’s senior vice president of Internet Software and Services and head of iTunes, Eddy Cue.
Iovine proclaimed that he has found his natural home. “I’ve always known in my heart that Beats belonged with Apple,” he said in a press release. “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’s executives also had something to say about the move. “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.”
In an interview with The New York Times, Cook made it even clearer that this was first and foremost an acquisition of people talent, calling Iovine and Dr. Dre “unique” and saying, “It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”
He acknowledged that some commentators had questioned why Apple hadn’t just built its own subscription service, if that’s what the company was after. ”You don’t build everything yourself. It’s not one thing that excites us here. It’s the people. It’s the service,” said Cook.
Cue gave some clue as to the reasoning behind the acquisition. “The addition of Beats will make our music line-up 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,” he said.
The deal is expected to be closed in the fiscal fourth quarter of the year.