5 things you should know about Apple’s $3-billion Beats buy

Apple is officially acquiring the stylish audio product company Beats for a total of US$3-billion. Founded by Jimmy Iovine and Dr Dre (formally Andre Romelle Young), the company consists of an online music streaming service (Beats Music), as well as the audio hardware division, Beats Electronics.

Though the deal was leaked a few weeks ago, it’s now been made public. Specifically, Apple’s bringing US$2.6-billion in cash with US$400-million to vest over time.

Here are some things you should know about the deal:

It’s the most expensive buy Apple’s ever made

Since Apple Inc. first started in 1976, the company has acquired 58 businesses. Before Beats, the most expensive buy — that we know of — was the NeXT computer company which was owned by former Apple CEO, Steve Jobs.

To put the acquisition in context, US$3-billion is three times more than Facebook paid for Instagram. The number is still fifteen times less than the Cupertino tech giant’s latest recorded quarterly revenue (45.6-billion).

Dr Dre is the world’s first motherf*ckin’ hip-hop billionaire

According to Forbes, Dre’s estimated to own between 20-25% of Beats shares. This means that he’ll earn between US$640-million and US$800-million from the Apple sale. Before the acquisition, Forbes has put his worth at around US$550-million so he’s likely to be a billionaire.

He himself boasted he was “the first billionaire in hip-hop, right here from the mother-f*ckin’ West Coast, believe it!” The clip was deleted shortly after.

Steve Jobs used to be a Dr Dre fan

Okay, maybe he didn’t listen to Dre’s tunes in his free time, but he did admire what the hip hop music producer has achieved in the music industry.

Over the years, Dr Dre has helped famous musicians like Snoop Dog, Eminem and 50 Cent break into the music business. Back in the day, Jobs congratulated the Dr Dre for helping shape the music industry. More specifically, Jobs said that he just loves having Dr Dre’s music productions on iTunes. See for yourself:

https://www.youtube.com/watch?v=DaxZ8XsN0xo

The music industry is in for a ride

Apple has revolutionised the music industry before. First, when it introduced the stylish iPod music player in 2001 and then, again, when it debuted its online music store, iTunes, eight months later.

Beats Music boasts over 250 000 US subscribers it scooped up in just three months. Similarly, Apple’s on-demand iTunes Radio was launched last year as an answer to popular services such as Spotify, and has achieved impressive growth.

Beats Music also has recently partnered with one of America’s most popular telecoms, AT&T, which will further help the company expand. This also opens up the doors for some exciting opportunities like subsidised online radio services.

“We think all of those things, when you put them all together, it’s on steroids with us together,” Apple SVP Eddy Cue recently said (according to a Techcrunch report).

Sadly, like iTunes Radio, Beats Music and Spotify are only available in the US.

We’re likely to see super stylish, high-end headphones in the near future

Apart from Apple’s EarPods which are in-ear headphones, Apple hasn’t attempted any serious audio hardware. “They make a phone… It’s not their responsibility to make the headphones,” Iovine recently said.

As Bloomberg suggested before, Apple intends to work with Beats in order to improve the quality of design in future versions of its high-end headphone lineup. Watch this space.