Apple Agrees to Buy Beats for $3 Billion, Jimmy leaves Interscope

[woof]

Apple Inc. wants to regain the beat.

The tech giant said on Wednesday it is buying Beats Electronics LLC for $3 billion to bolster a music business that has lost some of its mojo, as streaming-music services encroached on the downloads dominated by Apple's iTunes service.

In Beats, Apple is getting a music-streaming service, high-end headphones and music-industry connections. Beats' co-founders, rap star Dr. Dre and music mogul Jimmy Iovine, will join Apple.

The deal will make Apple "cool" again by uniting Mr. Iovine's feel for "the culture of young people" with Apple's "many millions of young peoples' credit cards, said Sony Music Entertainment Chief Executive Doug Morris, who, as the former chief executive of Universal Music, was Mr. Iovine's boss when he carved out a sideline running Beats. "Apple was starting to lose their edge," Mr. Morris said.

Apple didn't immediately respond to a request for comment.

Apple will continue to use the Beats brand, a rare move for a company that has almost always focused on its Apple brand.

Apple became one of the world's largest technology companies by creating huge, new consumer electronics categories with the iPhone and iPad. But it hasn't introduced a breakthrough product since co-founder Steve Jobs died in 2011.

At the same time, it has lost some of its grip on the music business, as listeners increasingly turn to streaming services such as Spotify and Pandora Media Inc.

U.S. sales of single downloads slid 6% to 1.3 billion tracks last year, while album downloads were flat at 118 million. Pandora's free, ad-supported service has more than 70 million active users and it had 3.3 million paying subscribers in March. Spotify, which entered the U.S. in 2011, now counts 10 million paying subscribers world-wide.

Apple launched its own free music-streaming service, iTunes Radio, last September. It counts 40 million U.S. users, but has yet to make much of a competitive dent. Beats started its $9.99-per-month subscription music-streaming service in January and has 250,000 paying subscribers so far, according to Apple.

Apple Chief Executive Tim Cook said the acquisition will help Apple bridge divides between Silicon Valley and Hollywood.

"We think these guys have a very rare talent," Mr. Cook said of Mr. Iovine and Dr. Dre, whose real name is Andre Young. "We love the subscription service that they built—we think it's the first subscription service that really got it right."

Mr. Iovine said on Wednesday that Mr. Cook told him that Apple wanted to acquire Beats during a meeting at Apple's headquarters in Cupertino, Calif., two months ago. Though Mr. Iovine had been working closely with Apple for 11 years on Apple's music strategy, he said was in disbelief.

"I kept selling like he didn't say anything," recalled Mr. Iovine.

Apple said it would pay $2.6 billion in cash and $400 million in equity for Beats Music, a subscription music-streaming business, and Beats Electronics, which makes pricey headphones, speakers and audio software. The equity is intended as incentive to keep Mr. Iovine and Dr. Dre at Apple.

The deal, which needs regulatory approval, is expected to close in Apple's fiscal fourth quarter, ending in September, the company said. Mr. Cook said the acquisition will contribute to Apple's earnings in the fiscal year beginning in October.

Apple shares rose 24 cents to $624.25 in after-hours trading on Wednesday. The stock has climbed more than 11% so far this year and hit a 52-week earlier on Wednesday.

Mr. Iovine said he will leave his post as chairman of Vivendi SA's Interscope Records and will work full-time at Apple. Dr. Dre said he will continue to produce music, but do "as much as it takes" for Apple.

The Beats deal is an effort by Mr. Cook to place his own stamp on Apple, which is still using much of the playbook established by Mr. Jobs. However, Beats pushes Apple in an unfamiliar direction. Not only will it take two celebrities into the company—it will acquire a new stand-alone brand, in a culture where the nearly exclusive brand until now has been Apple.

The acquisition is the largest in the company's history, far surpassing Apple's $400 million acquisition of NeXT Software Inc. in 1997. That deal brought Mr. Jobs back to the company, laying the foundation for its resurgence.

Now, Apple is counting on Mr. Iovine, a longtime friend of Mr. Jobs, to nurture partnerships with the music industry and other content creators, according to people familiar with the matter. Mr. Iovine's personality and entertainment industry connections may help Apple with content deals.

Mr. Iovine began his career as a music producer, working with Bruce Springsteen, U2, Patti Smith and others, but he has distinguished himself with savvy and inventive marketing. When online piracy eroded music sales, Mr. Iovine encouraged Interscope executives to think of themselves as "brand managers" with an array of products beyond recordings, including clothing, electronics, and even beverages. Beats By Dr. Dre headphones represent the most successful version of that strategy.

Beyond music, Apple has been working for several years on a device that allows users to stream live and on-demand TV programming and digital-video recordings stored in the "cloud," effectively taking the place of a traditional cable set-top box. However, it has struggled to strike the deals with media companies and cable providers to make it a reality. The hope, according to one person familiar with the matter, is that Mr. Iovine can help in this process.

Apple's share of online sales and rentals of movies and TV shows dropped to about 55% in the first quarter of this year, down from almost 75% in 2007, according market-research firm IHS. Growing competition from rivals including Amazon.com Inc. and Comcast Corp. , which recently began its own movie-download service, could erode that share even further.

As with music, Apple lacks the kind of movie-subscription service that has made Netflix Inc. a major force in Hollywood. Its television strategy has remained largely limited to offering downloads of old episodes via the iTunes Store and its Apple TV set top box.

[MontrealCity's Most]

So Jimmy and Dre work for apple now? Were they apart of the sale too?> lol

[⠀]

So Jimmy and Dre work for apple now? Were they apart of the sale too?> lol

"Back during slavery, when Black people like me talked to the slaves, they didn't kill 'em, they sent some old house Negro along behind him to undo what he said. You have to read the history of slavery to understand this. There were two kinds of Negroes. There was that old house Negro and the field Negro.

And the house Negro always looked out for his master. When the field Negroes got too much out of line, he held them back in check. He put 'em back on the plantation. The house Negro could afford to do that because he lived better than the field Negro. He ate better, he dressed better, and he lived in a better house. He lived right up next to his master - in the attic or the basement. He ate the same food his master ate and wore his same clothes. And he could talk just like his master - good diction. And he loved his master more than his master loved himself. That's why he didn't want his master hurt. If the master got sick, he'd say, "What's the matter, boss, we sick?" When the master's house caught afire, he'd try and put the fire out. He didn't want his master's house burned. He never wanted his master's property threatened. And he was more defensive of it than the master was.

That was the house Negro. But then you had some field Negroes, who lived in huts, had nothing to lose. They wore the worst kind of clothes. They ate the worst food. And they caught hell. They felt the sting of the lash. They hated their master. Oh yes, they did. If the master got sick, they'd pray that the master died. If the master's house caught afire, they'd pray for a strong wind to come along. This was the difference between the two.

And today you still have house Negroes and field Negroes. I'm a field Negro."

[Will_B]

Lol I love that quote about Dre. Will continue to do a bit here and there in the studio and at Apple. Like he got no actual role with any of it and is basically a face for the brand and nothing else

[V2DHeart]

Will Smith Dr Dre don't gotta cuss in his raps to sell records Headphones, well 'Ken Kannapan' does, so f* him and f* you too.

[abusive]

 The Chronic literally saved Interscope from going under and it's Beat By Dre, not beats by Ivonne. I would love to see DRE use some of his new money and do something big by his damn self.

Call me crazy but three billion for Dre, Jimmy, Beats and the streaming service seem a little light. I know the average person can only see that three billion dollars is alot of money which it is, but not in the context of this deal or in the context of what Apple is worth. If they are doing what I think they are doing by merging the record company (Dre and Jimmy), with the distribution (streaming service and i-tunes), with the technology that plays the music (i-pad, i-phone, i-pod etc.) to create a new business model, then three billion isn't anything in the long run. Really i-tunes is a label in itself as well as a distribution system. Most artist nowadays are signed to i-tunes when you think about it and they eat off of every artist that's on there. It looks like Apple wants Jimmy and Dre so they can take over music utilizing their pre existing technology.

[⠀]

The Chronic literally saved Interscope from going under and it's Beat By Dre, not beats by Ivonne. I would love to see DRE use some of his new money and do something big by his damn self.

Call me crazy but three billion for Dre, Jimmy, Beats and the streaming service seem a little light. I know the average person can only see that three billion dollars is alot of money which it is, but not in the context of this deal or in the context of what Apple is worth. If they are doing what I think they are doing by merging the record company (Dre and Jimmy), with the distribution (streaming service and i-tunes), with the technology that plays the music (i-pad, i-phone, i-pod etc.) to create a new business model, then three billion isn't anything in the long run. Really i-tunes is a label in itself as well as a distribution system. Most artist nowadays are signed to i-tunes when you think about it and they eat off of every artist that's on there. It looks like Apple wants Jimmy and Dre so they can take over music utilizing their pre existing technology.

Why of course, what else would you expect? Apple want to lock in every aspect of the game in order to ensure their own dominance.

Dre and Co built up great brand recognition and have idiots walking around with huge cans on their heads whilst waiting for Detox and Apple now have themselves a token negro. Poor Monster got screwed again and uncle Jimmy gets to buy more things that aren't for sale.

The record business is over and has been for quite some time, noone has been able to figure out a viable alternative (including those wack ass 360 deals) but it seems that Apple have an idea or two up their sleeve, watch this space as I predict within about a year it will become impossible to download tracks for free when they roll out the music ID software across all public servers and itunes will become the defacto market place.

They will be the only digital pushers on the block with product and that 3 bill is peanuts when you consider that FB paid 19 billion for Whatsapp.



Gotta give props to Dre though, he shows the world how a poor black kid from the streets can rise to become a billionaire as long as he greases the right sheaths.

[Negaisbacc]

The Chronic literally saved Interscope from going under and it's Beat By Dre, not beats by Ivonne. I would love to see DRE use some of his new money and do something big by his damn self.

Call me crazy but three billion for Dre, Jimmy, Beats and the streaming service seem a little light. I know the average person can only see that three billion dollars is alot of money which it is, but not in the context of this deal or in the context of what Apple is worth. If they are doing what I think they are doing by merging the record company (Dre and Jimmy), with the distribution (streaming service and i-tunes), with the technology that plays the music (i-pad, i-phone, i-pod etc.) to create a new business model, then three billion isn't anything in the long run. Really i-tunes is a label in itself as well as a distribution system. Most artist nowadays are signed to i-tunes when you think about it and they eat off of every artist that's on there. It looks like Apple wants Jimmy and Dre so they can take over music utilizing their pre existing technology.

Why of course, what else would you expect? Apple want to lock in every aspect of the game in order to ensure their own dominance.

Dre and Co built up great brand recognition and have idiots walking around with huge cans on their heads whilst waiting for Detox and Apple now have themselves a token negro. Poor Monster got screwed again and uncle Jimmy gets to buy more things that aren't for sale.

The record business is over and has been for quite some time, noone has been able to figure out a viable alternative (including those wack ass 360 deals) but it seems that Apple have an idea or two up their sleeve, watch this space as I predict within about a year it will become impossible to download tracks for free when they roll out the music ID software across all public servers and itunes will become the defacto market place.

They will be the only digital pushers on the block with product and that 3 bill is peanuts when you consider that FB paid 19 billion for Whatsapp.



Gotta give props to Dre though, he shows the world how a poor black kid from the streets can rise to become a billionaire as long as he greases the right sheaths.

Man Dre's forhead looks fucking huge. Maybe he can afford some new hair. Also Detox is never coming, it never was.

[MistaNova]

Started from the bottom now we here .

[⠀]

Like Pac said, as long as key's make g's these thieves attack...

Tim Cook: This is all about music, and we’ve always viewed that music was key to society and culture.

http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/Source

[abusive]

The Chronic literally saved Interscope from going under and it's Beat By Dre, not beats by Ivonne. I would love to see DRE use some of his new money and do something big by his damn self.

Call me crazy but three billion for Dre, Jimmy, Beats and the streaming service seem a little light. I know the average person can only see that three billion dollars is alot of money which it is, but not in the context of this deal or in the context of what Apple is worth. If they are doing what I think they are doing by merging the record company (Dre and Jimmy), with the distribution (streaming service and i-tunes), with the technology that plays the music (i-pad, i-phone, i-pod etc.) to create a new business model, then three billion isn't anything in the long run. Really i-tunes is a label in itself as well as a distribution system. Most artist nowadays are signed to i-tunes when you think about it and they eat off of every artist that's on there. It looks like Apple wants Jimmy and Dre so they can take over music utilizing their pre existing technology.

Why of course, what else would you expect? Apple want to lock in every aspect of the game in order to ensure their own dominance.

Dre and Co built up great brand recognition and have idiots walking around with huge cans on their heads whilst waiting for Detox and Apple now have themselves a token negro. Poor Monster got screwed again and uncle Jimmy gets to buy more things that aren't for sale.

The record business is over and has been for quite some time, noone has been able to figure out a viable alternative (including those wack ass 360 deals) but it seems that Apple have an idea or two up their sleeve, watch this space as I predict within about a year it will become impossible to download tracks for free when they roll out the music ID software across all public servers and itunes will become the defacto market place.

They will be the only digital pushers on the block with product and that 3 bill is peanuts when you consider that FB paid 19 billion for Whatsapp.



Gotta give props to Dre though, he shows the world how a poor black kid from the streets can rise to become a billionaire as long as he greases the right sheaths.

Sitting here looking at that picture really has me thinking that Ivonne has latched himself onto a genius like a life preserver.

http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/
Good read Eyeball thanks. Sounds like their money will multiple in just a few months from this deal. It was a steal after-all.

I cant agree with your conclusions 100% but you do seem to have some insight. How plausible do you think it is that Detox will drop on Apple similar to how Jay-Z's last album dropped on Samsung?

[GangstaBoogy]

And Detox is officially dead.

[⠀]

Sitting here looking at that picture really has me thinking that Ivonne has latched himself onto a genius like a life preserver.

http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/
Good read Eyeball thanks. Sounds like their money will multiple in just a few months from this deal. It was a steal after-all.

I cant agree with your conclusions 100% but you do seem to have some insight. How plausible do you think it is that Detox will drop on Apple similar to how Jay-Z's last album dropped on Samsung?

I made a lengthy post about the Detox situation a while ago, in a nutshell it's this:

Uncle Jimmy keeps Dre in the studio making beat after beat with his team (all on Interscopes dime so he gets the rights) whilst at the same time knocking his confidence with tales of woe in the industry, what's hot now, etc... The usual pimp mindset to keep the trick weak and on her knees.

They parley the hype and occasional video into the huge Beats brand and eat real big, whilst at the same time using the same pimp mindstate on the folks at Monster (a pimp truly is only a one trick pony). Some time later Dre dies and Uncle Jimmys descendants will use the beats that Dre crafted to launch the careers of many new artists thus making it three times that Dre saved Interscope.

Once with DR, once with Aftermath and once from beyond the grave. It's all been planned out long in advance.

That's the only way you are going to hear whats in the vaults, it's all engineered that way on purpose as Dre's in "Thriller" territory and no matter what he does (whilst living) it won't match up to what he's already done. So his only competition is himself, once he's off the scene then the value of those 1000s of Dre tracks in the vault increases exponentially and everybody eats yet again whilst peeps sit around all misty eyed reflecting on how great Dre was etc. etc. even if they don't give a toss whilst he's living.

Watch and see.

[Westcoastfanatic]

That pic kinda makes me sad too. Makes Dre look like a sellout and a house negro who only hangs with rich white guys nowadays.

[abusive]

Sitting here looking at that picture really has me thinking that Ivonne has latched himself onto a genius like a life preserver.

http://recode.net/2014/05/28/tim-cook-explains-why-apple-is-buying-beats-qa/
Good read Eyeball thanks. Sounds like their money will multiple in just a few months from this deal. It was a steal after-all.

I cant agree with your conclusions 100% but you do seem to have some insight. How plausible do you think it is that Detox will drop on Apple similar to how Jay-Z's last album dropped on Samsung?

I made a lengthy post about the Detox situation a while ago, in a nutshell it's this:

Uncle Jimmy keeps Dre in the studio making beat after beat with his team (all on Interscopes dime so he gets the rights) whilst at the same time knocking his confidence with tales of woe in the industry, what's hot now, etc... The usual pimp mindset to keep the trick weak and on her knees.

They parley the hype and occasional video into the huge Beats brand and eat real big, whilst at the same time using the same pimp mindstate on the folks at Monster (a pimp truly is only a one trick pony). Some time later Dre dies and Uncle Jimmys descendants will use the beats that Dre crafted to launch the careers of many new artists thus making it three times that Dre saved Interscope.

Once with DR, once with Aftermath and once from beyond the grave. It's all been planned out long in advance.

That's the only way you are going to hear whats in the vaults, it's all engineered that way on purpose as Dre's in "Thriller" territory and no matter what he does (whilst living) it won't match up to what he's already done. So his only competition is himself, once he's off the scene then the value of those 1000s of Dre tracks in the vault increases exponentially and everybody eats yet again whilst peeps sit around all misty eyed reflecting on how great Dre was etc. etc. even if they don't give a toss whilst he's living.

Watch and see.

I have said something similar in the past regarding Interscope. You hear artist talk about "I recorded over one hundred and fifty songs for the album and we selected the best ones." Ok, then were are the rest of the tracks? You had Rakim over there, Joell Ortiz, Charles Hamilton the list goes on and on and they've all said similar things in regards to recording a huge amount of tracks per project. You know the artist don't own it because they would have been put it out. The Interscope back catalog of talent in their prime must be huge. I could see them learning from Pac that having a catalog of unreleased material for any artist in the event they die is worth a bundle. Even for Detox Dre seems to have worked with the entire industry but has only put out a few feelers. Then they play games with the artist to get them to want to get out of their contract's after they don't release their music. They'll let them out of their contract but only if they give up their rights to previous materials they recorded while at the label.