Apple to Acquire Beats Music and Beats Electronics for $3 Billion
Posted on May 28, 2014
Apple has announced plans to acquire Beats Music and Beats Electronics in a $3 billion deal. Beats co-founders Jimmy Iovine and Dr. Dre will be joining Apple as part of the acquisition. Jimmy Iovine, Apple CEO Tim Cook, Dr. Dre and Apple's Eddy Cue, Apple's senior vice president of Internet Software and Service, are pictured in the photograph.
The deal was first rumored a couple weeks ago. It was quickly followed by a video with Dr. Dre and Tyrese Gibson celebrating the deal. The video boasted that Dr. Dre would become the first hip-hop billionaire. There were reports that Apple was outraged by the video. If Apple executives were upset with the video they clearly were not so outraged that they backed out of the acquisition.
Tim Cook says in a statement, "Music is such an important part of all of our lives and holds a special place within our hearts at Apple. 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."
Jimmy Iovine says, "I've always known in my heart that Beats belonged with Apple. 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."
In the release announcing the deal, Apple notes that music stars, including Lady Gaga and Nicki Minaj, have designed customized Beats headphones and speakers. They also mention collaborations with fashion designers, including Alexander Wang. The New York Times reports that the acquisition will help Apple compete with subscription-based music services through Beats Music, which has 250,000 paying subscribers.
Erich Joachimsthaler, founder and ceo of Vivaldi Partners Group, tells the AP that the $3 billion acquisition price makes sense. However, he doesn't think the purchase will "make Apple cooler." Take a look: