Apple to Acquire Beats Entertainment
Apple, arguably the world’s most globally successful (and technologically dominating) enterprise, is said to be taking over Beats Electronics - a company with respectable retail reputation (for high quality headphones) and a strategic business model whose efforts also focus on the streaming of music.
Rapper, record producer and entrepreneur, Dr Dre, alongside Chairman of Interscope Geffen A&M, Jimmy Iovine, collectively founded Beats Electronics in 2008. The company is largely recognised for its Beats By Dre headphones, earphones, and speakers, but it also runs software technology, Beats Audio, as well as a streaming service known as Beats Music. The deal that is thought to have taken place earlier this month between Apple and Beats Entertainment is said have been sealed for $3.2 billion, with Dre calling himself, “the first billionaire in hip-hop.”
Assuming that the acquisition did happen or is about to go ahead (Apple have still to confirm the rumours – although they haven’t denied them) the move will allow the company to fill one of the only gaps in its current music and technology range of products and services. With instant access to huge catalogues of music, streaming is one of the most popular methods for music lovers to listen to tracks legally and without paying (unless they opt for an ad-free upgrade). Spotify, Google and Sony are just a few of the many competitors in the same market, and with Apple having not yet established a streaming service it was only a matter of time before they did – especially in light of a recent report by Generator Research which stated that “the more Spotify expands in the US, the more money it loses.”
With many services reportedly not bringing in much revenue – due to low-paying advertisers and only a small number of subscribers – if Apple is successful at building a model that delivers a sustainable streaming service as well as making it profitable for artists, they could potentially transform large parts of the music industry into a solely Apple-fuelled economy. With the existing iTunes service, Apple already has strong connections and a number of current subscribers that could easily be converted to a streaming service. Operating on a multi-billion dollar profit, the company would have no problem with making initial financial sacrifices in hope of a long term return on investment.
Considering that the streaming of music is one of the only areas that Apple products have not been made specifically compatible with, the company’s latest move across the Monopoly board of technology and entertainment seems to have been predicted more accurately than the weather forecast.