Apple to buy Beats: Reasoning behind this?
It has been widely reported that Apple are inline to purchase the very well-known Beats for an amount believed to be in the region of $3 billion. On the surface this is not an acquisition which you would associate to be a ‘perfect fit’ for the behemoth tech firm. Usually you would expect them to be snapping up smaller more niche start-ups which can assist them with current projects. Yet here we have Beats a business which is more associated with physical commodities. View the Beats website here.
Before I lay my thoughts on the table I just want to put across some facts about Apple’s music infrastructure, hopefully you’ll realise where I’m going with this. We have to keep in mind Apple’s tight grip hold as the market leader in digital music downloads with 573 million users registered on iTunes. According to Billboard the iTunes store sold a record 1.34 billion units of digital track sales in 2013.
So what’s this got to do with Beats? The answer, Beat’s music streaming service app. This launched in January and Apple have been working closely with Beats to perfect it. The main selling point of this app is that it is customised to the user and streams music for the user and generates songs you like and would listen to.
If you couple this with Apple’s strong digital music distribution links along with large amounts of cash at their disposal, they could turn Beats into a force that could be leaving some of large music labels a little bit frightened! The music industry is becoming more and more digital, and more streaming so this could definitely be a play to position themselves for the coming years. Apple could be lining this up to go after music streaming service Spotify, who are valued at a cool $4 billion. Would be interesting to know if Apple have had any meetings with Spotify in the past couple months, wouldn’t surprise me if they had inquired.
Very well all of this, but if Steve Jobs was still at the helm would he have approved of this? I would argue a man with his visionary would have strived to build something bigger and better in house. Possibly Tim Cook (current Apple CEO) has realised that Apple are a little late to the streaming music game and feels it would take too long to innovate.
But more importantly, will this make Dr.Dre hip hop’s first billionaire. This would for sure piss of Diddy and Jay Z!