10 things you need to know about Apple buying Beats

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10 things you need to know about Apple buying Beats
Co-workers! (credit: Twitter/Tim Cook)

Apple made its purchase of Beats official today, capping off an almost-month long flurry of speculationdrunken video brags and dropping decimal points.

While we know a few fast details, like the $3 billion (about £1.79b, AU$3.25b) payday coming Dr. Dre and Jimmy Iovine’s way, there are plenty of points that could use a hash out.

Read on for what you need to know about this blockbuster deal. Here’s a teaser: your beloved Beats headphones are here to stay.

1. iTunes and iTunes Radio aren’t going away

Perhaps one of the biggest questions on everyone’s minds was whether the iTunes Store and/or iTunes Radio would be shuttered if Apple acquiredBeats Music. The answer, at least for now, is no.

Apple SVP of Internet Software and Services Eddy Cue said Beats Music will continue to operate as a “world-class subscription service” while iTunes Radio will live as a free option. Music purchases, meanwhile, can keep on keeping on at the iTunes Store.

In other words, Cupertino now has the third prong to its tune trident, giving consumers more options for how they buy and experience Apple-powered beats.

2. Apple could have built a subscription music service

But it didn’t need to.

How do we know this? Because Apple CEO Tim Cook said so.

“Could Eddy’s team have built a subscription service? Of course,” he toldThe New York Times after the deal was made public. But why build your own when you can snag somebody else’s plus an established hardware business and the minds that cooked it all up?

“It’s not one thing that excites us here,” Cook continued. “It’s the people. It’s the service.”

What’s more, Cook said in an internal memo to employees that Apple views Beats Music as “the first subscription service to really get it right,” and its combination of human curation and technology is the spot-on approach to music streaming.

Apple may be the king of simple design, but clearly reinventing the music streaming wheel wasn’t something it was up for.

3. Beats Music Android and Windows Phone apps are sticking around

Cook confirmed the Beats Music apps for Android and Windows Phone aren’t going away, saying, “It’s all about music” in an interview with The Financial Times (via 9to5Mac).

Even though Beats is maintaining its independence, it’s still somewhat surprising given Apple’s track record of shutting down apps on competing platforms once it’s bought a company.

4. Your favorite Beats headphones everywhere!

That’s sarcasm, by the way.

“Overpriced,” “overrated,” and an assortment of unprintable words are often used to describe Beats headphones and other audio products, and lucky for those who love to loathe them, the “b” branded bunch are heading to even more Apple stores.

They will also reach more ears in more countries via the Apple online store and authorized resellers. This means the legions of Beats “fans” will only grow bigger.

5. Dr. Dre and Jimmy Iovine are now Apple employees

And we’re not talking “special adviser” or “music culture consultants” or any other figurehead titles where the Beats co-founders are brought in for appearances then spend the rest of their time drinking Mai Tais on some secluded island. At least, not in Iovine’s case.

The Interscope Records Chairman is stepping down from his post to work full-time for Apple, according to The Wall Street Journal. Dr. Dre will continue making music, but he’ll do “as much as it takes” for the iPhone maker, whatever that means.

The details of their new jobs are still under wraps (if they ever come out from wraps), but we do know a few things. For one, their job titles are “Jimmy” and “Dre.” We expect business cards with the titles to be printed post haste.

According to Tim Cook in a Q&A with Re/code, the D.R.E. and Iovine are now “100%” full-time Apple employees, though his definition of full-time may be skewed for the famous rapper.

Iovine said in the same sit-down that he and Dre are already flying to Cupertino from Los Angeles “on a regular basis.” Now that he at least is out of a day job, he’ll be making the quick trip north more frequently.

The pair will work under Cue.

6. It really is about acquiring talent

Apple is certainly more than happy to call Beats’ premium if over-rated headphones and music service its own, but Cook has said repeatedly since news of the acquisition went live that he scored big time with Dre and Iovine.

“These guys are really unique,” Cook told the New York Times. “It’s like finding the precise grain of sand on the beach. They’re rare and very hard to find.”

The whole Beats family is also making the move to Apple, with the Beats Music team reporting to Eddy Cue’s crew and Beats Electronics moving under SVP of Worldwide Marketing Phil Schiller.

Looks like Gary Marshall was right all along.

7. This is Apple’s biggest buy ever

As Cook acknowledged today, Apple never talks about companies it purchases, making the verbosity surrounding today’s deal especially unique.

What’s also special here is the amount Apple is paying. Normally, Cupertino sticks with relatively smaller firms for relatively smaller prices. The Beats deal blows all of these out of the water with its $3 billion tag.

Don’t expect deals of this magnitude to become a regular occurance for Apple, but it’s a sign the company is willing to spend big for what it really wants.

8. Apple bought 27 companies in the last year

Un-Beats related, but a little Apple factoid to impress your friends.

9. The deal isn’t done, yet

As any casual industry watcher can tell you, companies may make acquisition plans official but the keys aren’t handed over until the regulators sing.

Apple buying Beats is no different, and various regulatory bodies will have to pass the purchase before the two can start cranking out hits. Apple anticipates the deal to close by the end of its fourth fiscal quarter, or towards the end of the year.

10. Apple is finally catching up with the streaming times

As services like Spotify, Pandora and, up until today, Beats Music, acquired more and more customers, iTunes suffered. Apple attempted to answer with iTunes Radio, but the effort clearly wasn’t enough to win back listeners.

Apple’s Beats buy signals a significant change of course for the company that’s known for sticking to its guns (see: 4-inch phone screens, “DOA” smaller tablets).

Steve Jobs started iTunes with the backing of a music industry willing to allow single-song purchases. It was revolutionary at the time but was quickly usurped as consumer tastes changed to prefer streaming options, even if they had to pay to rent music.

By bringing Beats Music into the fold, Apple is throwing up a white flag of sorts, though the surrender of its anti-subscription ways isn’t so much an admission of defeat as it is a sign that it’s finally heard the music.

Bonus: What products and services will Apple and Beats build together?

That is the (three) billion-dollar question. No one is talking specific future products, but Cook told the New York Times that Dr. Dre and Iovine will come up with “ways of features that blow your mind, and products you haven’t thought of yet.”

The pair, he continued, will “take music to an even higher level than it is now.”

via techradar

By Michelle Fitzsimmons 


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