Apple valued Beats Music at just under $500 million when calculating its $3 billion offer and subsequent deal to buy Beats, according to new reports. $500M is a very aggressive price for a 4 month old music service with just 250,000 subscribers.
Apple paid $2000 per user for Beats Music.
By comparison, Spotify which has 10 million paid subscribers worldwide, raised $250 million last November at a valuation of $4 billion or $400 per paid subscriber.
A source close to Beats told the Wall Street Journal that it had 2013 sales of $1.3 billion headphones and other audio gear, and that Beats was profitable. Beats Music launched with streaming music in January.
Apple's calculation of the value of Beats Music appears based on what it can become, rather than what it now is. With its clout and Beats' talent, Apple hopes to shed its bystander status and quickly become a leader in the shift to music streaming over ownership.