This Friday Apple approached Beats Electronics with a generous acquisition offer of $3.2 billion dollars! Beats Electronics is a company founded by Jimmy Lovine (Chairmen of Interscope-Geffen-A&M Records) and the rapper/producer Dr.DRE who founded the company in 2008. Since then Dr.DRE and Mr Lovine have dominated the market with their stylish celebratory endorsed Dre Beats headphones boasting superior sound quality and enabling them to work successfully with HP and HTC. HTC is infamous for having the best quality sound speakers in the market on their handsets, just last week we were reviewing the HTC One M8 and regarded how amazing it would be if every smartphone had BoomSound! HTC owe their niche of superior sound quality speakers souly to the success and technology of Beats Electronics. Back in 2011 HTC aquired the use and branding of Beats Electronics in their technology to produce ‘Boomsound’ for a controlling 50.1% stake in Beats for $309 million. Since then HTC have sold their 50.1% stake back to beats…
Tune in 2014 January DRE and Lovine launched their music streaming service ‘Beats Music’ which provides over twenty million music streams for music lovers to pay on subscription to listen too, competing with the likes of Spotify and Pandora two other successful music subscription services. So why does Apple want to hook up with DreBeats? The answer has to be simple money and market domination. Apple were the first company to produce the IPod an arguably moral portable device which made it possible for users to download and pay for music from its iTunes store instead of just downloading online for free without paying a penny. According to Billboard, music downloads at present are declining by 15% and music subscribers now contribute to a 21% of the music industries revenue. This means a trend is in process and more and more people opt to pay for a subscription service for music rather then download tracks from iTunes or anywhere else.
So it appears Apple want and with their declining iTunes sales ‘need’ to have their own streaming service if they are to stay ahead and alert to changes in the market. The acquisition with Beats will allow them to do this, virtually overnight overshadowing Spotify a streaming service founded in Sweden in 2006 which has worked awfully hard dominating the market converting people all across the globe onto its subscriber service. The winners in this deal will be DRE, Lovine and Apple the loosers will be Spotify who can do nothing but watch with abated breath as all their hard work converting subscribers is reduced to nothing. Apple has the brand loyalty and recognition to totally overshadow and extinguish Spotify. We might even see Apple produce it’s own BoomSound technology too which won’t be good for all the other competing handsets out there. The $3.2 billion is still on the table and Apple are expected to close the deal this week offering DRE and Lovine senior positions at Apple. Are you a music subscriber, do you download your music for free or at a fee?
Bradley James Davies i=Mc2