First things first: Apple
acquisition is happening, and Apple has confirmed it. The deal is for $2.6 billion in cash and $400 million in stocks, and--perhaps more notably--it will bring Beats co-founders Jimmy Iovine
and Dr. Dre
And that last bit, it seems, was and is the key to the whole thing. Apple doesn’t need a $3 billion headphone business; it needs to figure out how to win the music market, which has experienced a revolution in recent years.
For a moment, just after Napster blew apart the old model of buying and selling physical CDs at record stores and just before streaming services became the way many people listen to music, iTunes
was king. The ability to download any song you wanted for a buck was a phenomenal innovation.
Jimmy Iovine (Credit: Reuters/Lucy Nicholson)
Now, of course, the music landscape is different once again, and it’s wide open for whoever figures it out first. Apple has enough sense to know that it’s behind, as the Pandoras and Spotifys are attracting millions of users at the expense of iTunes. There are a lot of streaming services, actually, and Beats was running one of them.
According to Reuters, Beats pulled in some 250,000 users in just a few months of business. That’s not mind-blowing, but it’s not nothing, either. Further, there’s something to be said for Beats having that je ne sai quoi
courtesy of Iovine and Dre; not only is there star power, Iovine is a large figure in the music business, and Apple is betting that he’ll help guide them and their shiny new headphone unit--er, streaming service--into the future.
Reuters said that the Beats headphone group will be under Phil Schiller while the streaming service will be under Senior Vice President of Internet Software and Services Eddy Cue.