Music Business

9 Interesting Reasons Apple Might Buy Beats

Apple-logoI don't know why Apple may be buying Beats Electronics, but I'm guessing it has to do with music, tech and money. Others have much more to say and a seeming cottage industry in Apple/Beats commentary has emerged since secretive "sources" and "insiders" broke the news. Here are a variety of reasons that Beats Electronics may merge into Apple beyond just buying a headphone company with a streaming music service. Hypebot readers, you be the judge of which is worth considering and which just a bit off the wall.

While there actually seem to be more reasons Apple shouldn't buy Beats than the reverse, here are a variety of possibilities.

Fake Bob Lefsetz:


Gary Marshall/TechRadar: What it looks like is a talent acquisition."

"iTunes Radio has been rather underwhelming, both as a service and in terms of its ability to get contracts signed (which is why it's still not out in the UK, for example). Getting Beats' Jimmy Iovine, a music industry legend, into the Apple camp boosts its negotiating position considerably; getting Beats' engineers and experts to give iTunes and iTunes Radio a well-deserved kicking makes sense too."

Sam Gustin/Time: "One possible explanation for Apple’s interest in Beats might be the booming 'wearable computing' space."

"After all, Beats’ signature product is the high-bass headphone unit. If Apple can incorporate the Beats product into its wearable computing system — think Internet connected headphones — then the deal could pose a threat to Google, Facebook, and other companies that are forging ahead on smart glasses and watches."

Gordon Kelly/Forbes: "Apple is paying $3.2 billion for a fashion statement."

"Since it was founded in 2008 the company has been a marketing phenomenon. Dre’s involvement grabbed the attention of millions who had never considered premium headphones and its red cables and distinctive logo have become iconic. But behind this there is virtually nothing of use to Apple."

Alan Cross/A Journal of Musical Things: "Another Possible Reason iTunes Wants Beats: To Beef Up Retail"

"As my friend Pete summarizes things 'Apple isn’t moving products through the pipeline fast enough. To keep the high $/square foot ratio Wall Street loves, buy Beats, keep the margins nice and high [maybe even crush out some costs the way Tim Cook is famous for] and buy some time until the wearables thing shakes out.'"

Hannah Karp/Daisuke Wakabayashi/WSJ: Dr. Dre, Jimmy Iovine Would Both Join Apple in Beats Deal

"as Apple completes a deal to buy headphone and streaming-service company Beats Electronics LLC from Mr. Iovine and his co-founder, rap star Dr. Dre, both men are likely to take senior positions with the Cupertino, Calif., tech company, according to people familiar with the matter, commuting from the Los Angeles area to Silicon Valley—or meetings elsewhere—as needed."

Marcus Wohlsen/Wired "By taking Beats under its wing, a grown-up Apple may have finally found the way to bring the next great version of itself to life."

"More important than any specific product, however, is the prospect of Apple infusing itself with the creative energy Beats represents, and the willingness to look to the outside world to supply it. Apple has sat on so much cash for so long that it’s started to look like Smaug. Three billion dollars is just a small chunk of its horde, but the possible decision to actually spend meaningfully on new ideas could be a sign that Apple is finally ready to leave the lair and start acting like the hero of innovation its fans (and shareholders) expect."

Michelle Castillo/Adweek: "Purchasing the Jimmy Iovine and Dr. Dre empire may give Apple a slice of the millennial pie."

"'I got teens, and they don't listen to anything unless it's with those headphones. The association that Beats has with teens is it's cool. Apple is the brand of your mom,' Jonathan Adams, digital agency iCrossing’s head of media in North America, said."

Ted Gioia/The Daily Beast: "Apple Is Buying Beats to Control You"

"Apple has apparently concluded that the winner in the music business will be the company that owns the last centimeter in the distribution channel—that place where the songs reach the physical body of the consumer. It may be a virtual world, but it will be run by the handheld device in the listener’s pocket or, perhaps, the headset delivering music to captive ears."

Bonus: Top 10 juicy rationalizations for Apple's $3.2-billion Beats deal


Hypebot Senior Contributor Clyde Smith (@fluxresearch) posts music crowdfunding news @CrowdfundingM. To suggest topics about music tech, DIY music biz or music marketing for Hypebot, contact: clyde(at)fluxresearch(dot)com.

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  1. APPLE + BEATS: Apple should cut all ties and run! Help stop it and sign.
    The market has clearly communicated that it doesn’t like the idea of a Beats deal with Apple. However, most naysayers and the media have struggled to properly articulate the reasoning for the bearish sentiment.
    This is how it should be communicated:
    – Beats should be viewed as a fashion company, as they offer very little value-add from a technology perspective. Beats main market are teenagers who currently view the earphones as a “cool” fashion statement. This is the root of the concern, as we all know that fashion statements quickly become “uncool” due to overexposure, boredom, or something more “cool” coming onto the market. It would be fair to say that the best days of the Beats “coolness” are behind it, and the sunset looms as they may soon become “un-cool”. Paying $3.2 billion for a company that will probably fade away into “un-coolness” soon is probably not a wise acquisition. One cannot buy long term “coolness”, as it must be created or earned.
    – Apple could relatively easily create a superior headphone product at a fraction of the cost of the Beats acquisition, and Apple products are still very much “cool” and in fashion
    – Apple could improve its streaming service for a fraction of the cost of this deal, and Apple subscriptions and profitability would remain leaps and bounds ahead of the Beats service.
    On balance, very poor judgement at the top of Apple if this deal actually goes through.

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